5. Prices

Inflation-wise, in 2001 the chemical sector was one of the more stable of the Russian industries. Although the annual price index in the chemical sector may be higher than that in the Russian industry, and stood at 119.8%, it was importantly below the 2000 level, with deflationary processes registered in the sector by the end of the year. As for petrochemistry, where prices traditionally lag behind the inflationary rates in the industry in general, prices there started to decline in July and continued to depreciate through December. The net annualized appreciation result in the petrochemical industry was only slightly above 1% (Fig. 5.1).

Fig. 5.1
Price changes in the chemical and petrochemical sector in 2001, in % of 2000

The price hikes in the chemical industry were caused by the growing prices for non-organic chemicals. The highest price growth was registered for ammophos (172.7% of the 2000 prices); carbamide (127.6%), and hydrate of sodium (127.9%). Price index for synthetic ammonia was at 88.7% of December 2000. Of petrochemical products, the highest appreciated was methanol (+7.1%) and pvc (+6,7%), while other products kept depreciating throughout the year.

As a result of the lower world oil prices, Russia had to face excessive supply, leading to considerable domestic depreciation. While in December 2000 Russian consumers had to pay an average price of Rbs 1,546 per ton of oil, one year later the price was Rbs 1,504, which is 2.7% less. As a result, the main reason behind the relative appreciation of petrochemical products was the 60% growth in prices for natural gas. In turn, the 30% rise in electricity tariffs led to a tangible growth in prices for other chemicals since the sector has a number of highly power-intensive technological processes (Table 5.2).

Table 5.2
Average prices for key raw materials, fuel and energy resources in 2001, %

Although tariffs for the main types of transportation services did not grow generally as much as in the previous year, appreciation of transportation proved to be key inflationary factor in the chemical sector. It turned out that the appreciation was highest wherever pipelines were used to move the product (some types of petrochemicals, synthetic ammonia, etc.). Prices for this service in 2001 increased almost 1.6 times against 137.4% last year. The main type of transport used to ship chemicals domestically and abroad became more expensive almost by a third although, by comparison with the 70% appreciation in 2000, the growth seemed quite modest. The price for water transport increased 5% - 10% in 2001 (Table 5.3).

Table 5.3
Freight tariffs in key types of transportation in 2001, in % of December 2000