Polymer and feedstock price trends as on 24 July 2006

The third week of July 2006 witnessed a drop in the price of oil from US$78/barrel to $74.50/barrel by the end of the week, almost bringing it back to the level prevailing in the first week of July 2006. This was primarily due to the fact that inventory levels in USA, the largest user of oil in the World, had surged ahead. The Middle-East crisis also seems to be somewhat less turbulent compared to the last week, though it has not yet completely died down. Any further escalation could trigger a rise in price of oil and therefore of all petrochemicals. Asian price of naphtha declined by about 4% and reached a level of $660/MT from US$685/MT that was ruling last week. The price could step up again on escalation of the Middle-East crisis. Ethylene after showing some softening last week again showed an increase due to rise in demand of PE. This week the price of ethylene ruled at US$1190/MT from the lower price of $1170/MT in the last week. Its price is bound to show a rise in the coming week due to higher demand of ethylene products. PVC, PS as well as ABS are showing some sign of recovery in demand. Propylene after a steep increase softened up somewhat to the level of $1200 from $1230 in the second week of July 2006. This was mainly due to increased supply of parcels coming to Asian region. It is likely to firm up again due to stronger demand in Asia. PE (HDPE, LLDPE & LDPE) due to stronger demand, have gone up from US$1320 to US$1345-1350/MT with LLDPE showing an increase from US$1290 to US$1300/MT. LDPE has shown more increase in comparison to LLLDPE and has moved up to US$ 1320 from a level of US$1300/MT. The gap between LDPE and LLDPE has narrowed down to just $10/MT. It is to be seen whether this will give a boost to the demand of LDPE in comparison to LLDPE. PP price also showed an upward trend during the third week of July due to stronger demand pressures. The price rose to almost US$1310- 1315/MT from the level of US$1280/MT. The price would remain firm in the coming weeks due to continued interest because of stronger demand pull. PVC price, after showing stagnancy over the last two weeks, has once again started rising. The present price of PVC is US$850/MT compared to last week price of US$830/MT. Apparently PVC demand is picking up in Asia. Some of the Japanese producers have drastically reduced the plant operation almost by 50% because of poor return on the price of VCM because VCM price has remained stable at US$640/MT over the last two weeks. EDC price also has remained stagnant at $ 345/MT for the last two three weeks. After the last week's sharp increase of price of styrene it has become stagnant in this week. The present price of $ 1225-1230/MT is continued from the same level in the last week. PS (GPPS) price has shown an increase from US$1280/MT to US$1300/MT in this week. PS demand is slowly recovering to a higher level. It is expected that PS price will stabilize at about US$1300/ MT. ABS is also increasing this week. The present price is US$1570/MT from the last week of US$1550/MT because of an increase in demand in Asia particularly of China. It seems that ABS demand is picking up. This will lead to further increase of price in ABS in future.