Price trend of oil, feedstocks and commodity polymers for the week of 30 October, 2006

SUMMARY Oil remained practically at the same level as last week, of US$ 58/barrel, although price rose midweek in fear of higher demand due to oncoming winter and lower inventories in USA. Naphtha lost steam due to weaker demand. All other feedstocks were softer mainly due to weaker and duller market conditions. VCM had a steep fall due to weaker PVC demand in China as well other regions of Asia. All commodity polymers were traded at lower prices. PVC price collapsed drastically, while GPPPS and ABS maintained the price but all other commodity polymers lost the price support and remained at lower level. November 2006 may not see any upward revision in the price of oil feedstocks and commodity polymers. Only ABS may see price hardening due to an increase in the price of butadiene monomer. OIL Oil increased by about US$2/barrel for a couple of days due to lower inventories in USA compounded by impending cold weather in USA, lost the gain and slipped back to about US$58-59/barel. It is likely to continue in the same price range until December 2006 end. It could go down even further to about US$55/barrel. NAPHTHA Naphtha lost steam again and slid as low as US$520/MT before settling at around US$530/MT in the week of October 30th 2006. Naphtha will remain softer until its derivatives pick up. It is expected that it will remain range bound between US$520-530/MT until the end of December 2006. POLYMER FEEDSTOCKS ETHYLENE Ethylene price remained static at US$1080/MT in the week of October 30th 2006. November 2006 is not likely to see any significant change since the market remains dull for ethylene and its derivatives. PROPYLENE Propylene prices have also remained at the same level as that of October 23rd 2006 at US$1130/MT. November will see the price of propylene at this level as the market of propylene derivatives including polypropylene remain quiet and subdued. EDC EDC lost price again for the second consecutive week, finally settling at US$410/MT. The loss was less compared to the previous week. The bearish market will continue pressure on price in November 2006. It is quite likely that EDC would settle at US$400/MT by first week of November 2006 and may lose further towards the later part of November 2006. VCM The bearish Chinese demand of PVC exerted tremendous pressure on price of VCM that eventually settled at US$650/MT in the week of October 30th 2006. The lack luster demand of PVC in Asia will increase pressure on price of VCM. It is quite likely that the price could fall to US$620-630/MT by the later weeks of November 2006. STYRENE Due to sharp reversal of price of benzene styrene monomer also lost heavily and reached as low as US$1260/MT. The softer price would continue even in November 2006 and could slide down to US$1230-1250/MT. The dull demand of PS in Asia would not help in raising the price easily. POLYMERS LDPE LDPE lost again, but at a lower level compared to the week of 23rd October 2006. From US$1300/MT in the week of 23rd October 2006 it reached US$1290/MT. The weaker demand in Asia, including China, could reduce the price to as low as US$1250/MT by November 2006. LLDPE LLDPE price also slipped down to a level of US$1260/MT in the week of 30th October 2006, sliding by US$20/MT compared to US$10/MT in case of LDPE. While suppliers are interested in attaining the price of US$1300/MT, the customers are not wiling to buy beyond US$1250/MT. It is quite likely that the customers would win because of weaker demand. It is therefore anticipated that November 2006 will see the price of US$1250/MT. HDPE Cheaper deep-sea cargoes have compelled the suppliers to cut down the price from US$1300/MT in the week of 23rd October 2006 to US$1295/MT. The bearish demand could see the price erosion to the level of US$1270/MT in November 2006. PP The weaker demand scenario in China and other Asian countries compelled suppliers to reduce the price of PP to US$1250/MT in the week of October 30th 2006 from US$1275/MT in the week of 17th October 2006. While the suppliers are aiming at the price of US$1300/MT, dull market conditions compel them to offer the price of US$1250/MT. November 2006 may not see any significant shift in the price to a higher level. If at all, it will continue at the present level of US$1250/MT. It is quite possible that the price could go down still further and may reach a level of US$1230/MT. PVC PVC price collapsed again to US$810/MT from US$900/MT in the week of 23rd October 2006. November may see the price static at the level of US$810/MT. PS GPPS price remained static at US$1300-1310/MT in the week of October 30th 2006 due to dull market conditions. It is expected that GPPS will remain range bound between US$1280-1310/MT in November 2006. The shortage of styrene monomer in Asia could raise the price of styrene monomer and in turn the process of GPPS but the increase would be marginal. ABS ABS also remained stagnant at US$1600/MT in the week of October 30th October 2006. The higher price of butadiene could not exert pressures on prices because of rather inactive demand. November 2006 may not see any noticeable change in price, expected to hover around US$1600/MT in November 2006.