Price trend of oil, feedstock and commodity polymers for week of Sep 10, 2006 in Asia

OIL Oil after hovering around at US$ 65-66/barrel for almost 5 days has again dipped to US$ 63/barrel. US refineries have increased output. Also the inventory in USA is sufficient. Weaker US economy is not helping to gain higher price. Oil will continue to hover around this price in the remaining part of September 2006. It will have resistance when the price goes down to US $ 60/barrel. NAPHTHA Oil price dip has caused a sharp drop in price of naphtha to US $ 570/MT from US $ 608/MT in the week of September 3, 2006. It is expected that naphtha will continue to remain soft in September 2006. ETHYLENE Ethylene price showed weaker sentiment & lowered by US$10/MT to US$ 1390/MT mainly due to lowering of oil price. The demand however continues to be strong. It is therefore expected that ethylene will continue to remain strong in the remaining period of September 2006. Only further drop in the price of oil could offset the price rise to some extent. PROPYLENE Propylene reduced sharply mainly due to weaker demand. The price touched as low as US$1300-1305/MT. It is expected that propylene will never gain as much as ethylene in September 2006 & will remain range bound between US$1300-1325/MT. EDC EDC rose marginally by about US$10/MT & reached US$400/MT. EDC on account of stronger ethylene gained US$20/MT & reached US$420/MT in the week of September 11 2006. While demand is not very strong but it is certainly consistent. The demand of PVC as well other derivatives would determine the price of EDC but it is not likely to go up significantly only a minor correction would take place in September 2006 from now onwards. VCM VCM gained marginally mainly due to higher cost of ethylene & reached US$30/MT. The demand of PVC remained static & did not exert any pressure on VCM. China's market failed to go up after showing good activity in the last one month. VCM like EDC is likely to remain range bound between US$720-740/MT in September 2006. STYRENE Styrene price continued to slide downwards & reached US$1190/MT in the week of September 11, 2006 from US $ 1220/MT in the week of September 4, 2006. Its price will continue to remain softer during September 2006 due to weaker demand. While ethylene increase in price could exert the pressure but lower price of benzene could offset the gain. LDPE LDPE price after continuous increase in the last few months has remained stagnant at US$1440/MT. While ethylene could help in increasing the price there seems to be resistance from processors, as they find difficult to pass on the increase of cost to the end users. LDPE price would depend upon how strong is the resistance from the market of processors. However it is likely that there would be some modest increase in the price during the remaining part of September 2006. LLDPE LLDPE like LDPE also remained stable at US$1400/MT. However it is not likely to remain stagnant for a longer period & may increase by about US$20/MT. Overall the price of LLDPE ill continue to remain range bound between US$1400-1420/MT in September 2006. HDPE HDPE price also remained practically stagnant at US$1430/MT. Overall demand is positive but the resistance of processors is building up. September 2006 ill witness price stagnancy between US$1425-1450/MT PP PP price also got into stalemate like other PE grades. It is expected that price of PP would remain range bound between US$1420-1440/MT. The suppliers, however, are interested in achieving at least US$1450/MT in order to obtain return of overhead. It is to be seen whether the processors will give way to the demand of suppliers or will exert pressures & compel suppliers to lower the price. PVC The customers absorbed an increase of US$10/MT in PVC last week However the relatively weaker demand helped to keep price at the same level of US$950/MT in the week of September 11.2006. It is further expected that PVC will remain stagnant around this level in the remaining part of September 2006. PS GPPS price lowered marginally again to US$1330/MT from US$1335/MT in the week of September 11, 2006. Lowering of styrene monomer, weaker price of oil & most importantly the bearish demand of PS from the market are responsible for this decrease. The suppliers on account of low margin is not keen to increase output perhaps thinking that the price could harden. Also the margin available on ABS is better & therefore suppliers would like to concentrate on ABS production compared to GPPS. ABS ABS like PS also lowered marginally from US$1630/MT to US$1620/MT. The processors expecting price correction are waiting for price to reach US $ 1600/MT before lifting up sizable quantity of ABS. It is anticipated that price would get lowered to about US $ 1600/MT in the next two weeks. Conclusion Oil dropped further down & reached US $ 63/barrel. It is likely to go down further but will find resistance at US $ 60/barrel. Higher production coupled with sufficient inventory in USA is the prime reason for the drop. Naphtha also remained softer mainly due to somewhat weaker demand except that of PE. Ethylene & propylene ceased to surge further to surge higher due to tight supplies and stronger demand. PP is expected to provide some relief in September 2006, but PE is expected to remain stronger. Both EDC & VCM rose marginally due to increase in price of ethylene. All polymers except GPPS & ABS remained stable during the week of September 11, 2006. They are likely to remain range bound in the remaining period of September 2006. GPPS & ABS became weaker & are likely to remain softer during the rest of September 2006.