Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended June 16, 2008

CRUDE OIL From last weeks' record high prices exceeding US$138, oil prices fell to US$135 per barrel in New York in the week of June 16, 2008. Easing of supply concerns has helped oil prices dip to US$134 per barrel in Asia. Supply concerns eased after Saudi Arabia announced plans to boost production and OPEC questioned whether crude prices can remain so high. Saudi Arabia plans a 2% production hike, boosting output by 200,000 bpd, from June to July. In May, the kingdom raised production by 300,000 bpd, which was unnoticed global demand continued on a very strong note. A meeting of oil producing and consuming nations in Jeddah, has been called by Saudi on 22 July to seek ways to tackle soaring energy prices. NAPHTHA Robust gasoline prices in USA coupled with strong naphtha prices in Europe have pushed naphtha prices in Asia up by over fifty dollars to US$1150/MT in the week of June 16, 2008. ETHYLENE A buoyant downstream polyethylene market has made ethylene prices in Asia jump by hundred dollars to US$1590/MT in the week of June 16, 2008. After conclusion of a deal for June loading at US$1550/MT FOB Korea, selling intention were revised above US$1600/MT as supply gets tighter due to a sudden outage at South Korea's YNCC's no.2 cracker. PROPYLENE Propylene prices continue to be north bound as prices gained by yet another hundred dollars to settle at US$1750/MT levels in Asia in the week of June 16, 2008. A producer in South Korea has been heard to have offered material at US$1900/MT CFR levels. Buying interests seem reluctant and the market lacks firm offers as the extent of movement of propylene prices in the short term remains elusive. VCM Market for VCM lagged behind as prices stagnated at US$985/MT in Asia in the week of June 16, 2008. Most deals for June shipment from Japan were typically concluded at US$970/MT CFR China, despite preliminary offers being raised to US$1020/MT CFR. Reluctance from the Chinese buyers to accept such high price levels has kept prices down at last week's level. EDC Higher naphtha and ethylene values have kept EDC prices at high levels of US$485/MT in Asia in the week of June 16, 2008. EDC market has remained firm in Asia as global demand continues at a robust pace. Most EDC plants are currently being operated at full capacity to increase production of caustic soda that is commanding a good price globally. On the supply side: South Korea's Hanwha Chemical has shut down its 440,000 tpa EDC plant in Yeosu for a planned annual maintenance turnaround. Selling intentions persist at more than US$500/MT CFR Asia vis a vis buying intentions that are pegged at US$470/MT CFR CMP. STYRENE MONOMER Styrene Monomer prices have moved up to US$1655/MT in Asia in the week of June 16, 2008, in line with robust feedstock benzene and ethylene values coupled with a supply crunch caused by a sudden plant outage at Taiwan. Sellers are quoting offers for next month shipment at US$1655/MT FOB Korea, even as buying bids are maintained at US$1650/MT. Feedstock benzene prices moved up to US$1330/MT FOB Korea for July shipment, while August shipments were assessed ten dollars higher. POLYMERS HDPE HDPE prices in Asia escalated by fifty dollars to US$1825/MT on account of rising feedstock ethylene values and a supply crunch. Offers from a South Korean as well as Indian producer for July shipment are anticipated to rise to US$1850/MT CFR China after few deals for end of month shipment were concluded at US$1800/MT. Restricted supplies has forced Thai producer to intensify offers to US$1840/MT CFR China. LDPE LDPE prices crossed the 1900 mark, surging to US$1930/MT in Asia in the week of June 16, 2008. A supply crunch coupled with higher prices of EVA has taken their toll on LDPE offers. Most offers typically escalated past US$1950/MT levels CFR Asia due to supply constraints coupled with higher EVA prices. Rising ethylene values and a supply crisis will continue affecting prices in the next few weeks. LLDPE As sentiments recovered and picked up in the LLDPE markets, prices moved up by more than hundred dollars to US$1820/MT in Asia in the week of June 16, 2008. Few deals have been concluded at US$1800/MT, after which typical offers for July shipment have been hiked to US$1850/MT CFR China. PP Polypropylene prices in Asia spiralled to US$1960/MT, rising by over hundred dollars in the week of June 19, 2008. Restricted supplies coupled with runaway feedstock propylene prices have contributed to this price hike. After deals were concluded by a South Korean producer at US$1950/MT levels, selling intention has been hiked to US$2000/MT CFR China by Taiwanese as well as South Korean majors. PVC Awaiting offers for July shipment, market for Polyvinyl Chloride has been stagnant in Asia in the week of June 16, 2008. Most producers have not started to offer cargoes for July shipment yet. General market outlook continues to be robust on the back of higher feedstock values, despite restrained demand from China. Though Chinese PVC processors struggling to come to terms with current high prices are affecting demand, demand from India and Middle East continues to be strong. This indicates that July offers could be targeted to be hiked by atleast twenty dollars. GPPS Higher input costs in the form of rising feedstock styrene values has kept GPPS prices continuing on their upward march in Asia. GPPS prices rose to US$1735/MT in the week of June 16, 2008. As feedstock Styrene Monomer prices have revived and spiked to US$1650/MT levels, typical offers for end of June shipment for GPPS have moved up to US$1775/MT CFR China. Not much movement was seen in the markets as buyers are reluctant to accept offers at such a high level, which producers are unwilling to reduce, as they struggle to recover feedstock costs. ABS Surging feedstock butadiene costs have pushed up ABS prices to US$2140/MT. Typical offers for June shipment that have been increased to levels past US$2200/MT CFR China were met with resistance from buyers who have not yet adjusted to price correction. As the buyers and sellers test their staying power, markets will depend on who will relent first. Even as market lacks movement, the unexpected outage at Formosa's 300,000 tpa ABS plant at Nongbo has improved sentiments in Asia.