Continued Price Rises of Industrial Raw Materials in 1995

In 1994, world market prices of industrial raw materials rose by an average 17 percent on a dollar basis; a further 24 percent increase is projected for 1995. Major driving forces behind this trend are business cycle developments, poor harvests or planned production cuts as well as an in part significant depletion of stocks. A weakening of the international business cycle may be expected to dampen both demand and prices for industrial commodities. Thus, for 1996 prices are expected to rise by 5 percent only. For 1995, the strongest price increases are expected for nickel (+44 percent), aluminum (+33 percent) and copper (+31 percent); production shortages in the West are unlikely to be compensated by net exports from eastern countries. Among agricultural inputs for manufacturing, pulp tops the list of price hikes (almost +50 percent in 1995), but wool (+37 percent) will also register another significant price increase due to limits on production. Cotton, on the other hand, may see its quotation falling in 1996 (-11 percent), due to potential substitution by synthetic materials and increasing plantation surface. Because of exchange rate changes, Austrian import prices on a schilling basis have gone up less (+8½ percent in 1994) than dollar prices. Following world market developments, pulp, timber, aluminum, lead and nickel registered the strongest price increases.