US chemical and resin wholesale prices show gains in March

14 April 2011 14:26  [Source: ICIS news]

US chemical prices riseWASHINGTON (ICIS)--US wholesale prices for organic chemicals and plastic resins rose in March from February, the Department of Labor (DOL) said on Thursday, part of an overall 0.7% gain in prices at the producer level.

However, in its monthly report the department said that the 0.7% advance in its closely watched producer price index (PPI) was attributed almost wholly to a 2.6% gain in energy products during March, especially in gasolines.

In organic chemicals, producer prices (also known as wholesale prices) rose 3.4% last month compared with February, the department’s data showed.

This strong gain followed advances of 4.5% in February and 2.8% in January.

For plastic resins and materials, the gains were more modest, with wholesale prices gaining 0.8% in March from February, the department said.

The March advance followed a more modest 0.5% gain in producer prices for resins in February, with both months well below the sharp 3.1% gain in resins wholesale prices seen in January.

The overall producer price index has seen steady gains since the first of the year, with the PPI advancing by 1.6% in February and 0.8% in January.

As with other recent gains in the overall producer price level, almost all of the March PPI advance was laid to sharp advances in energy product pricing.

The department said that nearly 90% of the PPI increase in March was attributed to the 2.6% gain in energy products, and within that general category wholesale prices for gasoline shot up by 5.7%, accounting for more than 80% of the energy products price advance.

The increase in wholesale fuel prices last month marked the sixth straight monthly advance, the department said.

Gasoline prices at the retail level have been near or exceeding $4/gal (€2.76/gal) in many parts of the country, a level generally regarded as the pricing pain-point for US consumers.

In recent history, when gasoline reaches or exceeds $4/gal, US consumers begin to cut back on driving and make other spending reductions.

If gasoline prices at the pump continue to rise – and the March wholesale price gains for fuels indicate that they will – it could begin to undermine the still-modest US economic recovery.

Consumer spending is the driving force of the US economy, accounting for as much as 70% of all commercial activity.

($1 = €0.69)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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