Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended June 9, 2008

CRUDE OIL Crude oil prices bounced back past US$127 a barrel, recording a rise of over five dollars in the week, as the dollar fell in response to comments by European Central Bank President suggesting the bank could raise interest rates. When rates rise in Europe, or fall in USA, the dollar tends to weaken against the euro. Many investors buy commodities such as oil as a hedge against inflation when the dollar is falling. Also, a weaker greenback makes oil less expensive to investors dealing in other currencies. On Friday, the New York contract had its largest single day price jump of US$10.75, settling at US$138.50. NAPHTHA Naphtha prices in Asia arrested their fall in the week of June 9, 2008, rising to US$1090/MT, in line with record crude oil prices. Open-spec naphtha prices for H2-July delivery closed past US$1090/MT CNF Japan. VCM VCM prices in Asia edged up to US$985/MT in the week of June 9, 2008 in line with rising crude and feedstock values and robust downstream outlook. On the supply side, driven by restricted availabilities, sellers target a price exceeding US$1000/MT CFR China. Current prices can be appraised at US$990/MT CFR China levels, but are set to rise in line with rising upstream naphtha and robust downstream PVC prices. EDC Rising feedstock costs and improved sentiments in downstream PVC markets have pushed EDC prices up to US$485/MT in Asia in the week of June 9, 2008. Markets have not been very receptive to sellers' offers maintained above US$500/MT CFR China levels. As a result, few deals were concluded at these hiked levels, despite an indication that rising ethylene price will continue to exert pressure on prices. ETHYLENE An unplanned shutdown at Sinopec's Maoming Petrochemical's no.2 cracker has left the ethylene market short supplied, multiplying supply concerns in Asia. Ethylene prices for July shipment have shot up to US$1490/MT in Asia in the week of June 9, 2008. PROPYLENE A hundred dollar jump in prices was witnessed in the propylene markets of Asia, pushing prices up to US$1650/MT in the week of June 9, 2008. Supplies are expected to tighten as a result of a fire and subsequent shutdown of Maoming Petrochemical's 1mln tpa cracker and its derivative units. Propylene markets are currently under the dual force of restricted supplies and extremely robust downstream markets as PP prices rise past US$1800/MT CFR China. Seller's bids in the short supplied markets that rose to US$1700/MT FOB Korea were met with resistance from buyers, stagnating prices to US$1650/MT FOB. STYRENE MONOMER Styrene Monomer prices stagnated at US$1640/MT in Asia in the week of June 9, 2008. July shipment prices hovered around US$1640/MT FOB Korea, while CFR China prices were assessed upto US$1665/MT. Despite rising crude oil prices, feedstock benzene prices dipped by about twenty dollars to US$1280/MT in Asia. POLYMERS HDPE As a result of a fire, Maoming Petrochemicals has shut down its 370,000 tpa LDPE unit, 200,000 tpa LLDPE/HDPE swing plant and 350,000 tpa HDPE unit. This has resulted in short supply scenario, boosting HDPE prices in Asia to US$1745/MT in the week of June 9, 2008. As deals for end of June/early July shipment were concluded upto US$1735/MT CFR China, fresh offers were adjusted to US$1780/MT, as upstream ethylene costs surged. LDPE As a result of a fire, Maoming Petrochemicals has shut down its 370,000 tpa LDPE unit, 200,000 tpa LLDPE/HDPE swing plant and 350,000 tpa HDPE unit. LDPE prices continued to rise, reaching US$1850/MT in Asia in the week of June 9, 2008 as a result of supply constraints. June shipment deals were concluded upto US$1840/MT CFR against typical CFR China offers at US$1860/MT. Supply constraints are expected to further hike prices to US$1900/MT levels. LLDPE LLDPE prices continued to rise in Asia to US$1700/MT in the week of June 9, 2008 due to a supply scarcity caused by the unplanned outage at Maoming Petrochemical's PE plants. Prices are estimated to increase by another fifty dollars in the next few weeks on the back of rising feedstock values and uncertainty shrouding supply. PP Limited supplies coupled with rising feedstock propylene values have moved PP prices up to US$1830/MT in Asia in the week of June 9, 2008. In fact, the outage at Maoming helped push conclusion of few deals at US$1820/MT. This has encouraged selling intentions to hover around US$1900/MT CFR China. PVC Calm prevailed in the PVC markets of Asia, stabilizing prices at US$1200/MT in the week of June9, 2008, as deals from Taiwan, Japan and S.Korea have been concluded for June shipment. But buoyancy in the markets of Africa, Russia and Middle East has garnered support for PVC sentiments. Infact, June shipment PVC cargoes from Asia were heard at US$1300/MT CFR Middle East and Turkey. GPPS As feedstock Styrene Monomer prices continue to rise, GPPS prices gained strength to US$1685/MT in Asia in the week of June 9, 2008. Pressured by high input costs, suppliers from South Korea and Taiwan hiked June PS offers above US$1700/MT CFR Hongkong. Demand from China has been subdued as high sellers' offers have been met with resistance from buyers. ABS Butadiene supplies tightened as a result of a fire and subsequent shutdown of Maoming Petrochemical's 1mln tpa cracker and its derivative units. ABS offers for June shipment rose to US$2080/MT in Asia in the week of June 9, 2008. Typical offers from producers in South Korea and Taiwan rose past US$2110/MT CFR China. Though a couple of deals for June shipment were concluded at around US$2050/MT CFR China, most buyers are unwilling to buy at such high levels despite the freshly commenced peak production season.