Price trends for oil, feedstocks and commodity polymers for the week of January 15, 2007

SUMMARY Oil prices declined further and reached just below US$53/barrel, the lowest price in the last one year. Naphtha prices, on account of inactive market conditions and decline in oil prices, also reduced. Ethylene rose sharply due to tighter supply situation. But propylene and styrene monomer declined in line with reduction in oil price. EDC and VCM both increased due to supply problems of EDC. VCM increased due to higher price of EDC. While LDPE and LLDPE remained stagnant, HDPE declined due to weaker market conditions. PP also remained stagnant. Only PVC prices increased due to higher cost of EDC and VCM. Both GPPS and ABS remained stagnant in the 15th January week. The outlook for February 2007 appears to be good for customers and not good for suppliers. Oil is likely to remain weaker in February bring down all the prices of petrochemicals including polymer feedstocks and commodity polymers. OIL A warmer-than-normal winter in USA, with temperatures that has not been experienced for quite a while, has had a dramatic effect on the price of oil. The price tumbled down to just below US$53/barrel after caused price of oil to plunge. The price dropped significantly by almost 6% from the last year. This will help the polymer industry to grow better. NAPHTHA The price decline in oil has caused further erosion in the price of naphtha to US$510/MT. The price will not recover for quite some time. POLYMER FEEDSTOCKS ETHYLENE Ethylene price increased sharply despite a sharp decline in the oil price. It reached US$1290/ MT in the week of 15th January from US$1200/MT in the week of January 8, 2007. A very tight supply situation in Asia has caused such an increase. It is not likely to slide down in the remaining weeks of January 2007 and possibly even in February 2007. PROPYLENE Propylene, after going up in the week of January 8, 2007, became weak and reduced to US$1145/MT in the week of 15th January 2007. The price could remain stable or stagnate at this level in the remaining weeks of January 2007, mainly due to a dull market of Propylene derivatives. Trading for February delivery is being negotiated at US$1140/MT. EDC EDC sharply increased to US$450/MT in the week of 15th January 2007 due to tight availability in Asia. Formosa Plastics had some problems with its plant and therefore suspended the supply. This will increase the prices of all derivatives of EDC. February 2007 may witness continued firmness in the price of EDC due to continued trouble in supply. VCM VCM continued to remain firm mainly due to tight availability of EDC and higher price of EDC. VCM price rose to US$655/MT. February 2007 may witness further increase by another US$20-30/MT. STYRENE of styrene monomer to go down to US$1290/MT in the week of 15th January 2007. The price may continue to remain range-bound between US$1290-1300/MT in the remaining weeks of January 2007. POLYMERS LDPE LDPE remained stagnant at US$1320/MT in the week of 15th January 2007 due to weaker market conditions. A decline in oil price also contributed to this stagnancy. February 2007 may continue to see stagnancy in the price of LDPE. LLDPE LLDPE also remained stagnated at US$1300/MT in the week of 15th January 2007. Chinese producers are not willing to buy LLDPE because of weakness in the oil price. February 2007 may not see any significant change in the price of LLDPE. HDPE Sluggish demand from China and availability of cheap cargo from deep sea saw the price of HDPE decline to US$1300/MT in the week of 15th January 2007. February may witness the same trend. It is quite possible that the price could go down further by another US$10-20/MT. PP PP stagnated at US$1290/MT in the week of 15th January 2007. The weaker market sentiments, particularly from China, have resulted in lack of purchase. While the suppliers are willing to offer PP at US$1330/MT, the price is not likely to significantly change to a higher side because of lack of interest from customers. February 2007 may continue to remain weak. PVC PVC rose by US$10/MT to US$830/MT mainly due to increase in the feedstock prices. Though the market seems to be quiet, the onset of the agricultural season in Asia may develop a pickup in demand of PVC. It is therefore quite possible that PVC could go up by US$10-20/MT in February 2007. Only weaker sentiments in oil could dampen the price movements. PS GPPS stagnated at US$1410/MT in the week of 15th January 2007 mainly due to quiet market conditions. The producers are not willing to reduce the price. In fact, they would like to get US$1450/MT because of low inventory with them. However, the customers are not willing to pay more than US$1400/MT. They expect that weaker oil prices could reduce the price of GPPS in February 2007. Most likely the price of GPPS would remain flat during February 2007 around US$1400/MT. ABS The sluggish market conditions and weaker oil price kept ABS stagnated at US$1600/MT in the week of 15th January 2007. The suppliers are interested in selling ABS at US$1625-1650/MT but Chinese customers are not willing to pay anything higher than US$1600/MT. February 2007 could see ABS price to remain flat at the level of US$1600/MT.