Price trend of oil, feedstock and commodity polymers for week of Sep 24, 2006 in Asia

SUMMARY Oil continued its downward slide this week. This has resulted in the weakening of ethylene and propylene. EDC rose marginally but VCM remained flat due to inactive market conditions of PVC. Styrene rose marginally in the week of September 2006 mainly on account of benzene price. Further weakening of oil cannot be ruled out in October 2006. All the feedstocks along with oil are expected to remain soft in October 2006. Polyolefin products became weaker. PVC also was marginally lower while both PS and ABS were static. It is expected that all commodity polymers will be weaker in October 2006. OIL Oil has gone down below US$60/barrel in the week of September 24,2006. Dubai price showed greater weakness and reached US$55/barrel. It is quite possible that the price would either hover around US$55-60/barrel or even decline further in the coming weeks leading to Christmas 2006. NAPHTHA Naphtha also has fallen further to US$538/MT in the week of September 24, 2006. Softer price of oil is primarily responsible for further decline in naphtha price. It is quite possible that the price could get weaker and may attain levels of US$500-520/MT in the next few weeks. ETHYLENE Ethylene price tumbled very drastically to US$1280/MT from US$1370/MT. The market appears bearish with weaker sentiment prevailing in the Asian region. The future trend looks more bearish, leading to further declines to levels below US$1200 in October 2006. If prices slide, they could continue their downward trend and reach a level between US$1100-1150/MT in the coming few weeks. PROPYLENE The Asian market, seeing a very bearish sentiment on price of ethylene, seems to be in a wait and watch situation to see whether price head further south. This has brought down the price of propylene to just around US$1200/MT. Any further weakening of ethylene would also bring down the price of propylene since the demand of propylene is quite comparable to that of ethylene. It is quite possible that Asian market witness a price band of propylene in October between US$1150-1170/MT. EDC EDC remained firm mainly due to continued demand from China. EDC price continued to go up and reached US$450/MT. No respite is seen in the price of EDC although some correction is possible due to weaker demand of PVC from China. October 2006 may see price of EDC around US$440-460/MT. VCM The price of VCM remained flat during the week of September 24, 2006 mainly due to weaker sentiment for PVC in China. The suppliers bid for higher price of VCM due to an increase in the price of EDC, but the market did not agree. Further weakening of VCM is quite possible. EDC is expected in October 2006, to witness a price range of US$690-720/MT. STYRENE Firmer price of benzene helped an increase in the price of styrene monomer by US$10/MT to reach US$1240/MT. However, weaker buying sentiments, for both PS and ABS - the major derivatives of styrene monomer, would not allow the prices to harden. October 2006 may see a price band between US$1220-1240/MT. LDPE LDPE became weaker due to rather dull market sentiment in Asia particularly the weaker demand signals from China that dampened the price of LDPE to US$1375-1380/MT. October 2006 bookings are seen at lower price band of US$1225-1240/MT. LLDPE LLDPE remained static at US$1350/MT in the week of September 24, 2006. The quiet market environment in China was the main reason. It is not likely to harden in October 2006. In fact, it could show some more weakness and reach a level around US$1300-1320/MT. LLDPE price in Europe in the week of September 24, 2006 is below US$1200/MT. HDPE While suppliers were interested in achieving levels of US$1400/MT, the quiet market conditions saw a decline of US$20/MT. The price of HDPE in the week of September 24, 2006 went down to US$1380/MT. October 2006 may see further weakening to US$1360/MT or even lower particularly towards the end of October 2006. PP The bearish demand in Asian region was responsible for further drop to US$1350/MT. It is quite possible that October 2006 may see further decline to US$1300/MT. In fact the European price presently is hovering around US$1180/MT. PVC After a smart gain in the last week, price increase could not be sustained due to weaker demand in China and other regions of Asia. The price was lost by US$20/MT and rolled back to US$970/MT. The suppliers are diffident to offer PVC at lower price but the suppliers are not willing to purchase at a higher price. October 2006 may witness further reduction to just above US$900- 920/MT. PS An inactive and quieter market is responsible for PS price continuing to be static at the level of US$1300/MT. The weakening of oil price is another reason. However an increase in price of benzene could not bring an increase in the price of both styrene and PS. October 2006 may see further softening to the level of US$1280-1290/MT. ABS ABS like PS also remained soft and remained static at US$1590/MT. China, the major market of ABS in Asia is quiet and inactive. October 2006 may witness the price softening further to US$1560/MT.