Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of August 27, 2007

SUMMARY Crude oil futures dipped marginally to US$71.09 per barrel for September delivery in the week of August 27, 2007 on the New York Mercantile Exchange, on account of a sudden unexpected rise in inventories. Naphtha dipped in line with falling crude prices. Weaker buying sentiment has caused a sharp drop in ethylene and propylene prices. Rising upstream benzene prices supported a rise in Styrene monomer (SM) prices. EDC prices stagnated at last weeks level, while stringent supplies in the Asian region have supported a hike in VCM prices. HDPE and LDPE rose on the back of tight supply, while LLDPE and PP markets remained lackluster. PVC prices rose in line with higher VCM prices. GPPS prices dipped and ABS prices stagnated. CRUDE OIL Oil prices witnessed a marginal dip, slipping down to US$71.09 on the New York Mercantile Exchange in the week of August 27, 2007 on reports by the US Energy Department of an unexpected rise in inventories. Crude oil for October delivery climbed down from last weeks' US$71.98 a barrel after an opening price for the week of US$69.26 a barrel. NAPHTHA Naphtha prices in Asia dipped in tandem with weak crude oil prices by almost fifteen dollar to US$655 a barrel in the week of August 27, 2007. POLYMER FEEDSTOCK VCM Stringent supplies in the Asian region have supported a hike in VCM prices in Asia in the week of August 27, 2007 to US$840/MT. Despite inactivity in the market on account of absence of September offers from major suppliers, robust market outlook thrived on continuation of suspension of VCM exports next month by Tosoh due to insufficient inventories. It is anticipated that offers for VCM in September could increase by at least 20-30 dollars more. EDC Stringent supply amid emerging growing demand from non-vinyl producers, has maintained stability in the EDC market in Asia in the week of August 27, 2007. EDC prices stagnated at last week's level of US$480/MT. A gap of almost 20-30 dollars existed between supplier offers for September shipment and buying interest from vinyl producers in China, rendering the EDC market to remain lackluster. ETHYLENE Weaker buying sentiments in Asia led ethylene prices to drop by almost twenty five dollars from last week's price to US$1285/MT in the week of August 27, 2007. This dip in ethylene price was despite short supplies due to an expected maintenance shutdown at Formosa's No.1 naphtha cracker. Ethylene prices weakened by the lack of buying interest coupled with the strain of intensified supply from the Middle East region. Large quantity of ethylene from the Middle East region has become abundantly available due to glitches at downstream plants. PROPYLENE Propylene prices in Asia waned to US$1110/MT due to deficient buying interest despite an unforeseen outage of Formosa's No.1 naphtha cracker. Propylene market weakened on account of mellowed buying interest in Asia from wary buyers as preferred to wait in the sidelines. The reluctance to buy on part of the buyers was because of a continual decline in momentum in the downstream PP market for the past fortnight. STYRENE MONOMER (SM) A demand recovery from buyers in Asia has boosted benzene prices to US$990/MT in the week of August 27, 2007. This rise in upstream benzene prices supported a rise in SM prices to US$1390/MT in Asia in the week of August 27, 2007. HDPE Firm supplies coupled with higher cost of feedstock ethylene has supported a rise in HDPE prices to US$1425/MT in Asia in the week of August 27, 2007. HDPE prices are estimated to rise in the opening weeks of September. LDPE Firm supplies maintained strong market sentiments for LDPE in Asia. LDPE prices rose to US$1550/MT in Asia in the week of August 27, 2007. LDPE prices are estimated to rise in the opening weeks of September. LLDPE Market for LLDPE in Asia was lackluster and stagnated at US$1410/MT in the week of August 27, 2007. Suppliers attempted to hike offers by almost 10 dollars, but dull buying interest maintained LLDPE prices at last weeks' level. PP The PP markets remained laggard and stagnated at last weeks' levels of US$1400/MT in Asia in the week of August 27, 2007. Suppliers did try to hike offers by 15-20 dollars, but dull buying interest maintained PP prices at last weeks' level. Thin transactions were seen in the market, except small cargoes for immediate shipment on account of this low buying interest. PVC PVC prices in Asia rose to US$1030/MT in the week of August 27, 2007, corresponding with higher feedstock costs of VCM and calcium carbide. Tight supplies accompanied by strong global demand have caused market prices to continue to rise. PVC prices are estimated to rise in the next few weeks of September 2007 in tandem with rising VCM and calcium-carbide prices. GPPS GPPS markets dipped by ten dollars to US$1470/MT in the week of August 27, 2007 in Asia. This dip was in line with a correction in upstream SM values. Few deals were transacted as the mainstream Chinese buyers adopted a "wait and watch attitude". Offers from suppliers were down-adjusted in tandem with reduced buying interest. ABS An interesting development of "who will relent first" was witnessed in this weeks' ABS market. Prices for ABS stagnated at US$1700/MT as a bulk of buyers and sellers continued to remain in the sideline. Sellers did not want to budge from the selling price of US$1700/MT, consequential to historically high ACN values and higher butadiene prices. Interestingly, general buying interest was pegged lower as buyers adopted a cautious stance in a bid to keep an eye on the influence of bearish crude oil market on downstream sectors.