Price trends of oil, feedstock and commodity polymers for week October 09, 2006 in Asia

SUMMARY Oil became softer and dipped below US$60/barrel. In fact, it ruled around US$59/barrel & thus reached the lowest level in the past 6 months. Unless OPEC members take drastic actions and cut output, oil is not likely to revive. Most likely it would slide down further. Naphtha in tandem with oil, also lost steam & became weaker. All other polymer feedstocks also remained weaker due to absence activity in the Chinese market due to a weeklong holiday season in China & weaker market conditions in the other Asian countries. All commodity polymers also showed softer prices mainly due to weaker sentiments in oil, naphtha & other feedstocks. There is no likelihood of any significant revival of prices until the end of 2006. OIL Oil reached the lowest price after quite some time & remained low just hovering around US$58-59/barrel. It is expected to decline steadily & could reach around US$50 by the end of 2006. OPEC countries may put up a resistance by cutting down the production so that the price does not erode further down. NAPHTHA Naphtha, after showing some gain in the week of 2nd October slipped down again & ruled at US$525/MT this week. It will continue to show weakness in the next month along with softer oil prices. ETHYLENE Ethylene price continued to remain softer at US$1200/MT. The weaker sentiments in oil coupled with rather quiet activity in the Asian markets were responsible for lower price of ethylene. It is not expected to dramatically turn positive. Most likely it will remain in a narrow price range between US$1160 & 1200/MT. PROPYLENE The price of propylene reduced marginally & reached US$1170/MT this week. The markets of propylene and its derivatives are not brightening up. It is therefore possible that price of propylene would continue to remain soft in the coming weeks & even in November 2006. EDC The limited availability kept prices stable at US$450/MT in the week of October 2, 2006 despite weaker sentiments in the derivatives (mainly PVC). The suppliers wish to achieve higher prices but the users are unwilling to buy at these prices. Next few weeks would continue to show the same trend. VCM The absence of market requirement from China from the last week due to a weeklong holiday maintained the price almost stagnant around US$700/MT. It is unlikely that the market for PVC - the major user of VCM, will recover until the end of 2006. STYRENE Despite an increase in benzene price, styrene practically remained at the same level of US$1225-1235/MT. It is waiting for revival of PS, ABS as well as other derivatives. It is likely to remain range bound between US$1225-1240/MT in the coming weeks. LDPE LDPE, due to lack of market requirement from the Asia's major buyer China, has remained static at US$1350/MT. The weaker price of oil would make it difficult to gain in the next few weeks. The festive season of Christmas could bring some additionale demand could revive the price. LLDPE The absence of demand from China coupled with bearish market sentiments in the other Asian countries reduced the price of LLDPE to US$1320-1330/MT. The weaker oil coupled with beginning of winter season could continue the bearish market conditions until the end of 2006. HDPE HDPE, like LDPE & LLDPE remained dull. The price reduced to about US$1320-1330/MT. The price would remain soft until the end of 2006 due to softer oil conditions & quiet market conditions. PP The duller market conditions & weaker sentiments that prevailed in oil and natural gas reduced the price of PP to US$1320/MT. It is not likely to go up significantly until November 2006. Some revival may take place around Christmas of 2006. PVC PVC became marginally weaker continued to go down by about US$5-10/MT to US$950/MT in the week of October 9, 2006.It will continue to remain range bound between US$930-950/MT until November 2006. PS PS PS remained slightly lower than the week of 2nd October 2006 & reached US$1290-1295/MT. PS is expected to remain stagnant in the next few weeks due to weaker market dynamics. ABS ABS, like PS, also remained range bound between US$1590-1600/MT in the week of October 09,2006. The quiet market conditions would keep the price of ABS weaker & range bound between US$1580-1600/MT.