Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of September 15, 2008

CRUDE OIL As the dollar becomes stronger against major currencies, it has diminished the allure of commodities as a hedge, bringing down oil demand. Crude oil for October delivery declined by five dollars to US$101/MT in the week of September 15, 2008 in New York. At US$97.50, Brent crude oil prices continue falling for the twelfth consecutive day - the longest stretch since the contract was introduced in 1988. Hurricane Ike has also wrecked havoc in the US markets. Oil prices also slid because Hurricane Ike closed 14 gasoline refineries along the Gulf Coast, that collectively make about 22% of all the gas produced in the United States. Since close down refineries, can't use oil, the situation will lead to overstocking of oil unused by refineries. NAPHTHA Naphtha prices continue to fall in Asia in line with plummeting oil prices in the week of September 15, 2008. Mid week, prices dipped to lows of US$890/MT, but by end of week, open-spec naphtha values for H2 October shipment fell to US$910/MT CNF Japan. ETHYLENE Persistently falling oil and naphtha prices coupled with weak downstream demand continue exerting pressures on ethylene prices. Ethylene prices fell to US$1160/MT in Asia in the week of September 15, 2008. PROPYLENE Propylene prices have plunged to US$1200/MT in Asia in the week of September 15, 2008. Mounting stocks with propylene producers in Asia caused by weakened downstream demand on account of production cuts by PP and ACN makers, has exerted pressures on propylene prices. Prices in Asia have sunk by about 300 dollars this week as many PP and ACN makers in Asia have cut back operating rates to 70-75%. October shipment offers from Japan and South Korea have been heard at a scaled down level of US$1250/MT CFR China. These lowered offers also fail to invoke interest in Chinese buyers, who are reluctant to express interest at levels higher than the 1200 mark. VCM Falling input prices and weak downstream PVC demand has brought down VCM prices in Asia to US$815/MT in the week of September 15, 2008. Despite a price cut of 20-30 dollars this week, buyers have indicated interest at US$800/MT. Very few firm offers have been heard on persistently restrained market demand from PVC producers across the continent. EDC Dual forces are in play in the EDC markets of Asia, bringing down prices to US$425/MT in the week of September 15, 2008. All feedstock prices have plunged this week, coupled with a fall in downstream PVC and VCM markets. Deteriorating downstream demand has rendered an oversupply of EDC, as the markets are marked by the absence of buying bids. STYRENE MONOMER Styrene Monomer prices have fallen to US$1395/MT in Asia in the week of September 15, 2008. Offers have slipped by a further ten dollars as buyers are in a scuttle to liquidate cargoes, in anticipation of a further drop in prices. SM prices that continue to fall in Asia have not eroded producer profit margins. This is due to similar rate of deterioration in oil and feedstock benzene prices. With price gap between SM and naphtha pegged at about US$530/MT and between SM and benzene at about US$315/MT, a condition of ideal price gaps has come into force for SM producers. Though they have recovered, mid week, benzene prices slid to the US$1100/MT-falling to 5 month lows, corresponding with weakening crude oil prices as well as persistent oversupply in the region. A further drop in benzene values has been estimated, as the oversupply is expected to extend on account of an influx of cargoes from Iran and Singapore totaling to 24,000 tons in two equal cargoes. POLYMERS HDPE HDPE prices have sunk to US$1655/MT in Asia in the week of September 15, 2008 as the market outlook continues to be gloomy. As sentiments continue to be downbeat, CFR China deals for film grade from South Korea have been concluded at US$1650/MT, and at US$1625/MT for Thai material, against offers pegged at US$1685/MT. LDPE Subdued buying in Asia's largest market- China, has weakened LDPE prices in the continent to US$1770/MT in the week of September 15, 2008. Lowered CFR China offers from the Middle East have met with resistance from buyers, whose intentions are pegged at the 1700 dollar mark. LLDPE Muted demand from China as well as bearish HDPE markets has doused LLDPE offers to US$1675/MT in Asia in the week of September 15, 2008. Despite CFR China offers falling by $25 as compared to September offers, a further dip in prices is expected as deep-sea cargoes were offered about twenty dollars lower. Polypropylene Persistently dull and slack demand from China has dunked polypropylene prices in Asia to US$1540/MT in the week of September 15, 2008. CFR China September offers are being heard at lows of US$1550/MT, and 20 dollars lower from the Middle East. Lackluster buying has resulted in inventory build up, exerting added strain on the upcoming PP offers. Hence buyers prefer to wait in the sidelines despite further downward price revision, even as few CFR China deep-sea cargoes were being offered at below the 1500 mark. PVC Deteriorating feedstock VCM prices and unenthusiastic buying has dampened market outlook for PVC in Asia. Prices that have fallen to US$1110/MT in Asia in the week of September 15, 2008, have been met with buyer reluctance, who have expressed an interest in prices about fifty dollars lower. Buyers prefer to wait and watch for revised offers. GPPS Falling oil and feedstock SM values as well as weak demand from China have pulled down GPPS prices to US$1575/MT in Asia in the week of September 15, 2008. Market outlook continues to be pessimistic as buying interest has dipped to US$1570/MT even as CFR China offers have been slashed by twenty dollars. ABS ABS price have slipped to US$2050/MT in Asia, falling by twenty dollars in the week of September 15, 2008. Demand continues to be subdued even as CFR China offers. As low priced offers dipped to US$2050/MT, market participants preferred to wait in the sidelines in anticipation of a further price drop in line with falling crude vales.