Development of external trade price indices - 2. quarter of 2004
Product Code: e-7232-04
Development of external trade price indices in the second quarter of 2004
Month-on-month evaluation:
Both import and export prices had similar development in the second quarter of 2004. They were increasing in April (by 0.2% and 0.4%, respectively), while in the following two months of the second quarter they were decreasing. In May, both import and export prices decreased by 0.1%, in June by 0.8% and 0.4%, respectively. This variable development during the second quarter can be partially explained also by the influence of Czech koruna exchange rate in relation to main foreign currencies, especially to EUR and USD. In the period mentioned Czech koruna appreciated to these currencies and thus the exchange rate influence generally decreased the price development. In May and June Czech koruna appreciated month-on-month both to EUR and USD, while in April it appreciated only to EUR. Depreciation of CZK to USD in April thus slightly reduced in general the exchange rate influence on decreasing of prices in that month. Naturally, the exchange rate influence can be traced also in the total price development in the second quarter of 2004. Import prices decreased in average month-on-month by 0.2%, while export prices remained unchanged. In both cases it was a decrease by 0.9 percentual point when compared to the first quarter of 2004. In the second quarter of 2004, Czech koruna depreciated to USD by 1.1% when compared to the first quarter; however, it appreciated to EUR by 2.6%. Since the proportion of foreign transactions in EUR is clearly prevailing (especially at export), it was again an influence, which in total led to a decrease of external trade prices.
Import prices grew month-on-month from December 2003 to April 2004. However, in the last two months of the second quarter of 2004 they started to decrease (by 0.1% and 0.8%, respectively) and in total for the second quarter they decreased by the above-mentioned 0.2%. In the average for the second quarter, prices of all significant items measured decreased with the exception of ‘crude materials, inedible, except fuels’ (growth by 1.5%) and ‘mineral fuels, lubricants and related materials’ (increase by 1.7%). Within ‘crude materials, inedible, except fuels’ an important price increase occurred in ‘metalliferous ores and metal scrap‘ (+10.1%), which was connected with a sharp increase of prices of scrap. At ‘mineral fuels, lubricants and related materials’ mainly prices of ’petroleum, petroleum products and related materials’ were increasing above the average. This development was fully in accord with the development on world markets; both for this division and at world commodity exchanges prices were increasing in April and May, while in June there was a decrease. In April and May, petroleum prices grew mainly due to high Chinese demand, anxieties about low supply of petroleum and petrol in the USA before the starting motor season, political instability in Venezuela (the third biggest OPEC producer), slow revitalization of petroleum export from Iraq, explosion and fire in the third biggest refinery in the USA, anxieties about world safety, attacks in Saudi Arabia and violence in Nigeria. In June petroleum prices temporarily decreased, which was caused, besides others, by the OPEC decision to increase production and by the take over of the power in Iraq by provisional government. In July, petroleum prices on world commodity exchange grew again (with a highly probable impact on the growth of Czech import prices) and to the above-mentioned factors anxiety about disruption of supply from Russia was added (in relation to problems of the Yukos company). Price of the Brent petroleum measured thus underwent very dramatic development in the mentioned period: from the average price in April of 32.89 USD/barrel (with daily quotation slightly over 30 USD/barrel from time to time) up to the July average of 37.69 USD/barrel (with daily quotations even over 40 USD/barrel in the end of the month).
Also export prices (after month-on-month growths from December 2003) were decreasing in the last two months of the second quarter of 2004; as already stated above, they did not change in average in this quarter. In the quarter average, prices of all significant commodities measured decreased month-on-month with the exception of ‘mineral fuels, lubricants and related materials’ and ‘manufactured goods classified chiefly by material‘. Prices of ‘mineral fuels, lubricants and related materials’ increased by 1.8% and especially the dynamic development of the petroleum market was reflected there similarly as at the import. Prices of ‘manufactured goods classified chiefly by material‘ increased by 1.4%. At the same time, it was the only one from sections measured, for which the percentual difference between the first and second quarter of 2004 was positive, even though it was only 0.1 percentual point. The highest price increase (+6.3%) occurred in the ‘iron and steel‘ division (in the section of ‘manufactured goods classified chiefly by material‘). Thus, it was confirmed that increased import prices of scrap in particular were reflected in the next phase of the reproduction process. This phenomenon starts to be observed also in the most significant section as for weights - ‘machinery and transport equipment‘ – in which the only division for which prices in June 2004 were growing was ‘machinery specialized for particular industries‘, i.e. division with higher share of iron material.
Terms of trade reached in average the positive value of 100.2% in the second quarter, i.e. the same value as in the previous two quarters. However, when compared to the first quarter of 2004, the terms of trade were more fluctuating in individual months (100.2%, 100.0% and 100.4%, respectively) and, most of all, there were bigger differences between individual sections. While in the first quarter the terms of trade were unfavourable only in ‘crude materials, inedible, except fuels’ (99.5%), in the second quarter the terms of trade in this section worsened even more (97.3% - influence of increased import prices of ‘metalliferous ores and metal scrap‘) and also other sections were added, especially the most significant one as for weights - ‘machinery and transport equipment‘. There, the terms of trade value decreased from 100.4% in the first quarter of 2004 to 99.9% in the following quarter and the terms of trade in this section were unfavourable for the first time since the second quarter of 2002. On the contrary, an important increase of the value of terms of trade occurred at ‘manufactured goods classified chiefly by material‘ – from 100.2% to 101.6% (influence of export prices of ‘manufactured goods classified chiefly by material‘ – of iron and steel and ‘manufactures of metals‘). Positive development of terms of trade was observed also at food (from 100.1% to 100.5%), in which especially at diary products a positive influence of participation in supporting and subsidy programmes after the accession to the EU was observed.
Year-on-year evaluation:
In average for the second quarter of 2004, import prices increased year-on-year by 2.2% and export prices by 4.3%. From the annexed table it also results that in comparison with the first quarter of 2004 they grew faster (by 2.2 and 1.7 percentual point, respectively) and that in April and May both the prices speeded up their growth, while in June 2004 the growth slowed down for both again. Similarly as at the month-on-month development, also this year-on-year external trade price development can be partially explained by influence of the Czech koruna exchange rate in relation to main foreign currencies, especially to EUR and USD. While in the month-on-month development this factor caused a decrease of prices (Czech koruna was appreciating in total), at the year-on-year development the influence of Czech koruna exchange rate was increasing prices. In total, Czech koruna was depreciating year-on-year – at the simultaneous appreciation to USD in average by 4.3% and depreciation to EUR in average by 1.7% and at the same time at absolute domination of EUR in the currency basket of external trade prices, especially at export. However, by the influence of koruna exchange rate to main foreign currencies not only the amount but also the development of external trade prices can be explained. In the previous, i.e. the first quarter of 2004, the average year-on-year appreciation of koruna to USD was 12.1%, while to EUR koruna depreciated by 3.7%. It is clear that in the first quarter of 2004 the numerical ratio of koruna appreciation to USD (which decreased the level of external prices) to the depreciation of koruna to EUR (which increased the level of external prices) was higher than in the second quarter of 2004 (3.3 and 2.5). In the case of import, this ratio of 3.3 got even closer to the ratio of EUR to USD in the currency basket of external trade prices. That was also one of the reasons (an important one, however) why import prices remained unchanged year-on-year in the first quarter of 2004 unlike in the following quarter. The procedure described can be used also for an analysis of the year-on-year development of external trade prices in individual months of the second quarter of 2004. In all of those months, koruna appreciated to USD year-on-year, while to EUR it depreciated. The ratio of these “appreciations” and “depreciations” in individual months was 2.8, 0.9 and 5.7, respectively. With regards to the composition of the currency basket of external trade prices, the exchange rate influence caused in all months of the second quarter of 2004 a price increase (with the exception of import prices in June, when this influence was basically zero) and at the same time in May more than in April and in June less than in May. The data in the annexed table confirm these tendencies. The year-on-year level of import and export prices is higher than 100 (and at the same time higher than in the first quarter) and the price growth in May is higher year-on-year for both the import and export prices than in April and at the same time in June lower than in May. Of course, it is only one of the influences, but an important one.
Import prices as it was already mentioned above, increased in average in the second quarter of 2004 by 2.2% year-on-year. Prices of all import sections increased year-on-year with the exception of ‘machinery and transport equipment‘ and ‘miscellaneous manufactured articles‘ (decrease by 0.4% and 0.5%, respectively). At the same time, in comparison with the first quarter of 2004, the year-on-year price growth accelerated at all import sections with the exception of ‘chemicals and related products‘ and ‘miscellaneous manufactured articles‘. In the second quarter, the biggest price increase occurred at ‘crude materials, inedible, except fuels’ and ‘mineral fuels, lubricants and related materials’. Prices of ‘crude materials, inedible, except fuels’ increased by 11.9% and, similarly as at the month-on-month comparison, the biggest increase occurred at ‘metalliferous ores and metal scrap‘ (+58.7%). This development is fully in accord with both the steep increase of metal scrap prices as well as the price increase of metals on world commodity exchange. Their prices in the second quarter of 2004 increased year-on-year by 34.3%; the biggest increase was observed especially at non-ferrous metals. In the second quarter of 2004, also import prices of ‘mineral fuels, lubricants and related materials’ increased most year-on-year. They increased in total by 7.7%; the most dynamic development was at ’petroleum, petroleum products and related materials’ (+17.4%). The import price development is again reflecting the development on world commodity exchange (although with some time delay). In the second quarter, the price of Brent petroleum increased year-on-year by 36.4%.
Export prices have been increasing year-on-year since April 2003 already. As already mentioned above, in the second quarter of 2004 their increase was bigger – they increased in average by 4.3% year-on-year. The growth was observed at all sections measured with the exception of a smaller section of beverages and tobacco. The biggest increase (+19.4%) was at ‘mineral fuels, lubricants and related materials’, where similar influences as at import prices were observed. Further, the biggest year-on-year price increase was at prices of ‘manufactured goods classified chiefly by material‘ (by 8.5%); similarly as at the month-on-month comparison, the biggest year-on-year increase was at ‘manufactured goods classified chiefly by material‘ – of iron and steel and also at ‘manufactures of metals‘ (+27.5% and 13.1%, respectively). Similarly as at import prices, also there the influence of scrap prices increase was reflected together with an increase of metal prices on world commodity exchange. The year-on-year export prices of ‘machinery and transport equipment‘ increased in the second quarter of 2004 by 2.2%. The value was by 0.2 percentual point lower than in the first quarter; however, for some items, especially those with higher contents of metal material, prices grew faster. Increased prices of metals and scrap thus gradually went through the entire production process.
Terms of trade reached a positive value of 102.1% for the second quarter of 2004. In individual months these values were 102.1%, 101.9% and 102.1%, respectively. The value of 102.1% is by 0.5 percentual point lower than in the first quarter of 2004; however, unfavourable terms of trade occurred only at a smaller section of beverages and tobacco and at ‘crude materials, inedible, except fuels‘ (84.1% and 90.9%, respectively). This value was the highest in ‘mineral fuels, lubricants and related materials’ (110.9%) in which, however, also the biggest decrease occurred in comparison with the previous quarter (by 10.0 percentual point), which is again related to the price development on world commodity exchange. As for significant sections, terms of trade were favourable especially at ‘manufactured goods classified chiefly by material‘ (103.9%) and, traditionally, at ‘machinery and transport equipment‘ (102.6%), where the terms of trade have been favourable continually since May 2001 already.
Elaborated by: Prices Statistics Department, Mr Jiří Choun
Director: Jiří Mrázek, tel. (+420) 27405 2533
