Rise in Industrial Raw Material Prices Set to Abate

After the strong increases in 1994 and 1995 by 17 percent and 19 percent, respectively, prices of industrial raw materials are set to advance by a more modest 3 percent this year, as a consequence of weaker demand related to sluggish industrial output growth. By the first half of 1997, prices may remain flat. Some commodities may still register significant price hikes in 1996, such as nickel (+10 percent) due to supply bottlenecks or tin (+9 percent) because of supply discipline of major producers. The price of cotton wool is expected to fall by 15 percent following record harvests; sawn timber may experience a similarly strong price decline (–14 percent) under the impact of a receding residential construction activity.