US June chemical prices rise 2.4%, driving broader gains

14 July 2011 15:15  [Source: ICIS news]

WASHINGTON (ICIS)--US producer prices for organic chemicals rose by 2.4% in June from May, the Department of Labor (DOL) said on Thursday – the principal cause for an overall 0.3% increase in wholesale prices for intermediate core goods during the month.

In its monthly report, the department noted that the 2.4% gain in organic chemicals prices at the producer level – also known as wholesale prices – followed even stronger price increases for these commodities – 4.4% in May, 3.3% in April and 3.4% in March.

The department said that among intermediate goods excluding foods and energy, known as core intermediate goods, “about two-thirds of the June increase can be traced to the index for basic organic chemicals”.

Intermediate goods are those purchased by other manufacturers or producers for use in generating end-user products.

In plastics, the picture was more complicated.  The department said that wholesale prices for plastic resins and materials fell by 0.8% in June from May, following the sharp 4.6% gain seen in May and a 2.6% advance in April.

But intermediate plastics products and synthetic rubbers experienced price gains at the wholesale level in June, according to the department.

“Higher prices for plastic products also contributed to the advance in intermediate core prices,” the report added. 

Those intermediate plastic products categories include resin-based construction materials, up by 1.5% in June, and a 0.8% producer price gain for both unsupported plastic film and plastic parts and components for manufacturing.

Wholesale prices for synthetic rubbers shot up by 3% in June from May.

Overall, the department said its producer price index (PPI) for June fell by 0.4%, after gains of 0.2% in May and 0.8% in April.

The June PPI drop-off was attributed wholly to a 2.8% drop in energy products, including a 4.7% decline in wholesale gasoline prices.

With energy and food products left out of the overall producer price index, the so-called core index of finished goods saw a wholesale price gain of 0.3% in June, marking the seventh consecutive monthly increase, the department said.

Economists typically focus more on the core index, because month-to-month price fluctuations in energy products and foods can be volatile.

The department noted that June’s 2.8% fall in wholesale prices for energy products was the sharpest one-month decline since a 4.7% drop in July 2009.

While the department’s bureau of labor statistics compiles monthly price changes in hundreds of commodities and products, it does not provide any analysis of those shifts.

($1 = €0.71)

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

By: Joe Kamalick
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