Price trend of oil, feedstock and commodity polymers for week ended October 02, 2006 in Asia

SUMMARY Oil rose by US$3/barrel due to fear that OPEC producers of oil would resist the price erosion. It is to be seen whether the price increase would be sustained in the next few weeks. While naphtha after a very long time rose smartly, ethylene & propylene eroded sharply due to weaker demand. EDC, VCM & styrene monomer remained static due to weaker market conditions. No bright aspect is seen in the horizon & the prices are likely to rule softer or weaker in the remaining weeks of October 2006. Polyolefin products continued to remain weaker with quieter market conditions. PVC lost marginally what it gained last week, while both PS & ABS were stagnant. It is expected that all commodity polymers will be weaker in next few weeks of October 2006. OIL Oil, after reaching lowest price below US$60/barrel in the week of September 24, 2006 again gained about US$3/barrel & reached almost US$63/barrel because of a fear that OPEC producers may intervene & stop the sliding further down immediately. It is to be seen whether this higher price would be sustained or would find resistance. NAPHTHA Naphtha, after consistently going down for the last several weeks, rose from US$538/MT in the week of September 24, 2006 rose to US$545/MT in the week of October 2, 2006. It is not certain whether the price would be sustained or go up in the coming few weeks since the demand of naphtha derivatives is not strong enough to pull up the price. The hardening of oil price is mainly attributed to the price rise this week. Any fall in the price of oil would see the price trend of naphtha again sliding down. ETHYLENE Ethylene price tumbled very drastically to US$1180/MT from US$1280/MT. The markets of ethylene derivatives in Asia continue to remain sluggish. It is quite possible that next few weeks or even November 2006 may see further drop in price of ethylene. PROPYLENE The price of propylene reduced by about US$25/MT & reached US$1180 in the week of October 2 2006. The markets of propylene derivatives including that of propylene are not showing any sign of recovery. It is therefore possible that price of propylene would continue to remain soft in the coming weeks & even in November 2006. EDC The limited availability kept price stable at US$450/MT this week despite weaker sentiments in the derivatives, mainly PVC. The suppliers wish to achieve higher price but the users are unwilling to pay higher price. Next few weeks would continue to show the same trend. VCM The weaker demand of PVC from China is not allowing price of VCM to go up. It therefore remained stagnant at US$740/MT in this week. Next few weeks see stagnancy in the price of VCM. Only revival of PVC demand will make the price of VCM going up North. STYRENE After gaining US$10/MT last week styrene monomer could not retain the increased price & fell back by US$10/MT & reached US$1230/MT. No dramatic price movement is anticipated due to quieter market scenario of the derivatives including major products like PS & ABS. LDPE LDPE demand scenario has become bearish & kept the price of LDPE in this week at the same level as that prevailed last week (US$1360/MT). Only hardening of oil & ethylene could make the prices rise. Otherwise the price is likely to remain stable between US$1340 -1360/MT in the remaining weeks of October 2006. LLDPE The subdued demand in Asian region continued the price stability at US$1350/MT for another week in succession. Next few weeks will see some drop in the price of LLDPE due to weaker sentiments in the market. HDPE HDPE market remained weaker, making price of HDPE slide by about US$10-20/MT over the price of US$1370/MT. There is no hope of revival of market conditions immediately. The price of HDPE will remain range bound between US$1350-1370/MT. PP The continued weaker market conditions resulted in marginal drop (by US$10/MT) & the price of PP could not be sustained beyond US$1340/MT. The remaining weeks of October 2006 will continue to show weaker or softer price of PP. It is quite possible that the price would remain range bound between US$1325-1350/MT. PVC PVC continued to go down for second week in succession after gaining for one week earlier. The price prevalent in this week was US$960. It is quite possible that the price would go down below US$940/MT or remain range bound between US$930-960/MT in the next few weeks. PS PS price continued to remain stagnant at US$1300/MT. The inactive and quieter market will keep the price range bound between US$1280-1300/MTis responsible. ABS ABS, like PS also remained quieter & the price in the week of October 2 2006 remained at US$1590/MT. The quiet market conditions would keep the price of ABS weaker & range bound between US$1570-1590/MT.