Price trends of oil, feedstock and commodity polymers for week of August 07,2006

Oil Oil price marginally rose in the first week of August 2006 mainly due to fear of tropical storm Chris in the Caribbean Sea and upsetting US oil production. However, this fear was not well founded and the price dropped below US$75/barrel from an increase to US$76/barrel over the last 2-3 days. Oil however is traded for September even at lower price. Naphtha The fear of oil price increase initially put up a hefty increase in price of naphtha from US$645/MT to US$660/MT but after the fear subsided, the price of naphtha rolled back below US$625/MT and thus decreasing from US$645/MT of the first week of August 2006. Ethylene Due to continued stronger demand of ethylene derivatives, the price of ethylene remained stronger. It was maintained at US$1250-1260/MT It is believed that some of the Asian trades have been done at the price as high as US$1325/MT. Propylene Propylene, like ethylene also showed remained stable over the last week. The present price remained at US$1270-1280/MT. Some sales have been done at the price as high as US$1300/MT. EDC EDC price remained stable at US$345-350/MT.The weaker demand of EDC derivatives did not help pushing price further. EDC is expected to remain stable during August. VCM VCM price like that of EDC was maintained at US US$660/MT. Styrene Styrene price showed a further increase and reached US$1270/MT although some deals were sited at US$1280-1285/MT September bids are even quoted closer to US US$1300/MT It appears that styrene derivatives are having stronger demand. Polymers LDPE LDPE price showed a sharp increase from US US$1340/MT to US US$1370/MT mainly due to stronger demand in China and an increase in demand due to the forthcoming agriculture season. LLDPE LLDPE like LDPE has been showing an increasingly stronger demand but not as stronger as LDPE. Its price therefore rose by US US$20/MT from US US$1330/MT to US$1350/MT. HDPE An increase in ethylene price along with stronger demand from Chinese market have led the price of HDPE to US US$1370/MT from an average price of US US$1350/MT that prevailed in the first week of August 2006. PP The price of PP continued to surge ahead due to stronger demand in China particularly of raffia, BOPP film and injection moulding. Impact copolymer seems to show the maximum increase of US US$30-40/MT over the first week of August 2006. Some of the Asian suppliers have increased the prices of PP because of poorer returns/margins. Sabic has also increased its PP price from the week of August 07,2006 The prevalent price of PP for this week is US US$1370/MT. It is expected that the price in the forthcoming few weeks will remain stronger due to higher demand and supply constraint PVC PVC price marginally increased from US US$860/MT to about US US$865 -870/MT. The forthcoming agriculture season would increase the demand of PVC particularly of pipes, the largest application of PVC polymer. PS The price of GPPS did not increase in tandem with sharp increase of styrene monomer's price. In fact, price of GPPS remained almost stagnant at US US$1320/MT. It appears that its price in the remaining period of August 2006 would continue to be stable or some marginal increase may take place due to sharp increase in the styrene monomer price. ABS While GPPS remained stagnant in this week ABS price increased to US US$1610/MT from a level of US US$1590/MT in the first week of August 2006. In fact some of the deals are sought at a price as high as US US$1630/ MT. The stronger prices of all the three monomers of ABS are responsible for stronger price of ABS. The demand seems to remain stronger at least in August and may extend to the first half of September 2006. ABS is therefore expected to remain stronger in price for the next one month. Conclusion The week of 7th August 2006 appears to be somewhat mixed in prices. While oil seems to stabilize at US US$74/barrel, naphtha declined but ethylene and propylene remained static at the same prices as that of 31st July 2006. EDC and VCM also remained stagnant. Styrene monomer price showed a sharp increase of US US$30/MT. Among the polymers only GPPS remained stagnant all other polymers became stronger in prices. LDPE, LLDPE and PP showed an increase of US US$30/MT in price. PVC was marginally higher. ABS remained stronger mainly due to increase in demand and increase in all three monomers prices. For the remaining period of August 2006 it is expected to show the same trend. Conclusion While oil price, after an initial tumultuous 2 weeks of July, showed decline towards the end of July, prices of all feed stocks as well as all commodity polymers have showed price increase towards the end of July 2006. Ethylene, propylene & styrene monomers have gained positively during July 2006.No respite in their prices are expected in August 2006. VCM although showed some increase towards the end of July due to increased demand of PVC however did not show the same strength as shown by the other feed stocks. All commodity polymers have shown an increase in their prices from the beginning of July 2006 towards the end of July 2006. They are likely to see more pressures on prices in August 2006. PP as well as all PE grades will gain the most while PVC and PS will gain the least during 2006.