Germany March raw material price index jumps on Libya conflict

06 April 2011 18:31  [Source: ICIS news]

LONDON (ICIS)--A key German raw materials price index rose sharply in March from February because of higher oil prices due to the ongoing conflict in Libya, a Hamburg-based economics institute said on Wednesday.

The Hamburgisches Weltwirtschaftsinstitut (HWWI) said its raw materials price index rose 8.1% month on month in US dollar terms and 5.4% in euro terms.

However, excluding energy, the index fell 1.5% in US dollar and was down 4.0% in euro as metal and agricultural commodity prices fell in March.

Also, rubber prices fell 13.8% in US dollar and 16.0% in euro from February as many of Japan’s car factories halted production following the 11 March earthquake and tsunami, translating into lower rubber demand for tyres, the institute said.

As for the outlook, HWWI said oil would continue to trade at high price levels.

Despite UN intervention, it remains unclear when the fighting in Libya will stop, the institute said.

Even after the fighting ends, Libya’s oil production may not resume immediately because of damage to oil facilities and harbour infrastructure, it added.

As for agricultural commodities, wheat, rice and corn (maize) prices are likely to rise, following a price decline in March from February, HWWI said.

The US, the world’s largest corn exporter, has already warned of a tightening in corn supplies, it said. The institute added that while corn prices fell 0.7% in US dollar and 3.2% in euro in March from February, prices are up 97.9% and 72.7% respectively, since summer 2010.

German chemicals producers recently warned that the increase in raw material costs could slow growth in the country’s economy and poses an increasing challenge for its chemical firms.

Read Paul Hodges’ Chemicals and the Economy Blog

By: Stefan Baumgarten
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