Price trends for oil, feedstocks and commodity polymers for the week of 22nd January, 2007

SUMMARY Oil price remained at the same level of just below US$52/barrel in the week of 22nd January 2007. The stability in the price of oil has either helped to maintain the price stability or marginally decline in some cases due to market conditions. Naphtha remained stagnant. While propylene and VCM remained stagnant ethylene and EDC rose due to tight supply situation mainly due to maintenance shutdown of a few plants in Asia. Styrene monomer declined due to drop in the price of benzene and the bearish demand of styrene derivatives. HDPE and PP declined, while both LDPE and LLDPE remained stable due to weaker market conditions. PVC saw an increase due to increase in the price of EDC. The market however does not seem to be very active. Both GPPS and ABS declined due to weaker market conditions. February 2007 could see an increase in the price of ethylene and VCM. LDPE and LLDPE may see some rise in the price during February 2007. HDPE and PP may see stability or decline in their prices in February 2007. PVC could see some increase due to tight availability. Both GPPS and ABS may remain stagnant in February 2007. OIL Oil remained range bound just below US$52/barrel in the week of 22nd January 2007. This has resulted in the softening of polymer prices. It is likely to remain around US$50-52/barrel in February 2007. The warmer season across North America and Europe appear to have caused the drop in the price of oil. NAPHTHA Naphtha also remained stagnant at US$510/MT due to stagnancy in oil price. The derivative market of naphtha is quiet and dull. Naphtha is likely to go down to US$500/MT in February 2007. POLYMER FEEDSTOCKS ETHYLENE After a sharp increase in the price of ethylene last week, it has gone up further to US$1300-1305/MT. The suppliers are being quoted to offer parcels at US$1350-1400/MT for future supplies in February 2007. The main reason is the tight supply situation due to unexpected cracker troubles at S. Korea's SK Corp. and YNCC that have caused shortage of free availability of ethylene in the market place. February 2007 could see a continued rise in the price of ethylene to almost 1375/MT. PROPYLENE Propylene, unlike ethylene has declined to US$1125/MT due to weaker market demand. February 2007 may witness further erosion in the price of propylene. It is quite likely that the price in February could be around 1075/ MT. EDC The continued tight supply situation due to maintenance shutdown of a few plants in Asia was the highlight of this week of 22nd January 2007. However, the price remained stagnant at US$450/MT in the week of 22nd January 2007. February may see firmness in the price of EDC due to tight availability. Only respite may come from the dull market of EDC derivatives including that of VCM and PVC. The price could remain either stationary or may go up by US$10/ MT in February 2007. VCM VCM, unlike EDC, remained stagnant at US$655/MT in the week of 22nd January 2007. Higher price of ethylene and tight availability of VCM could not increase the price because of dull market. Besides, the customers were waiting to see the effect of price reduction in oil. Supply is expected to ease by mid Feb due to restarting of the plants those were shutdown due to maintenance. The suppliers however are aiming to achieve higher price but they are not likely to realize the higher price. However, February 2007 may witness price ranging between US$655-670/MT. STYRENE The weaker oil price as well as decline in benzene price caused a sharp drop in the price of styrene monomer to US$1230/MT (US$60/MT decline) in the week of 22nd January 2007. February 2007 may witness further erosion in the price to US$1220/MT. Styrene monomer derivatives including PS and ABS are having duller market conditions. POLYMERS LDPE LDPE remained quiet at US$1320/MT in the week of 22nd January 2007 due to weaker market conditions. The demand of China seems to be quiet. However February 2007 may see the price to go up to US$1330-1340/MT due to revival of market in China. LLDPE The weaker demand all across the Asian region and decline in the price of HDPE have caused the price to remain stable at US 1300/MT in the week of 22nd January 2007. February 2007 may witness stagnancy in LLDPE at US$1300/MT. HDPE The subdued market conditions all across the Asian region and more so from China has compelled the suppliers to decrease the price of HDPE by another US$20/MT to US$1280/MT in the week of 22nd January 2007. February 2007 may expect the price of US$1250/MT of HDPE. PP PP price declined to US$1270/MT in the week of 22nd January 2007 from US$1290/MT in the week of 15th January 2007. The weaker market conditions were the prime reasons. China was particularly dull. Besides Chinese PP producers were supplying at lower price at around US$1250/MT. The customers are not wiling to purchase the February 2007 requirement at US$1250/MT. The price in February could see further erosion to US$1250/ MT or even lower. PVC PVC is the only polymer that increased in this week due to good market conditions. However, the customers are not willing to pay the higher price of US$850 in the week of 22nd January 2007 and would like to wait and watch the trend. February 2007 could either witness stability in the price or a slight increase .However, the customers unwillingness to buy at this price even now can see stagnancy in the price at this level. The suppliers are interested in achieving the price of US$860-870/ MT for February 2007. PS GPPS declined to US$1400/MT in the week of 22nd January 2007 due to dull market conditions. Chinese market was very quiet. February 2007 may see stagnancy in the price. The suppliers are interested in achieving higher price but availability of lower price from the local suppliers in China have lead Chinese customers to wait and watch for future supply. February 2007 could see a price stagnancy at US$1400/MT. ABS The bearish market from China caused a decline in the price of ABS to US$1580/MT. February 2007 could witness a price range of US$1560-1580/MT.