Price trends of oil, feedstock and commodity polymers for week of August 14,2006 in Asia

Oil Oil price fearing a threat to bombing of US airlines emanating from Europe or more particularly from London & disruption of oil supply from BP rose sharply to US$77/barrel for one day in the middle part of week but again subsided and remained range bound around US$74.5/barrel. It appears that there is some stability on the price. It is quite possible to experience stability in the remaining days of August. In fact September may witness a slight reduction in its price and may settle down around US$73-74/barrel. Naphtha Weaker demand of Asia reflected in lowering of naphtha price to about US$650-652/MT. There is no immediate revival of demand of naphtha or petrochemicals based on butadiene etc, that depend upon naphtha as a source. The weakening of oil also showed in the price decline of naphtha. It is likely that the price would still further weaken in the coming weeks. It can go down to US$640-645/MT. Ethylene After showing strong demand for the last few weeks in Asia, both ethylene and propylene relented due to resistance from the customers. The present price of ethylene is hovering around US$1250/MT. The remaining period of August may not see any significant increase in its price and may remain range bound at about US$1250/MT. Propylene Propylene like ethylene also showed weaker demand due to increasing resistance from customers. The present price ruled at the same level as that of the last week (US$1270-1280/MT). No indications are seen in lesser resistance from the market in the future weeks. It is therefore expected that the present price would prevail in the remaining weeks of August 2006. EDC EDC price showed some firmness and a rise from US$350/MT to about US$360/MT. The increase in price was due to the perceived increasing of ethylene price. Actually the tighter supply of EDC was more responsible for this increase of US$10/MT. If PVC demand shows revival it is quite possible that EDC price could remain firmer. However the present indication does not show much revival of PVC. The other derivatives of EDC could only keep price of EDC firm in the rest of August 2006. We do not expect the price of EDC rising any further beyond the present price of US$360/MT It is quite possible that price may remain range bound between US$350-360/MT. VCM VCM price remained stable at US$660/MT mainly because of its main derivative PVC had a flatter demand. August as well as September could remain stable for VCM. The revival of PVC could only be seen on onset of winter some where after middle of October 2006 and increase in demand of Chinese market due to agriculture sector. Styrene Styrene price showed a sharp rise from US$1280/MT to almost US$1300/MT. While demand of PS and ABS are likely to be good the increase of ethylene and benzene, the two feedstocks for styrene were stronger due to increase in the price of oil. Styrene price may not see any further dramatic increase as any significant price rise would face resistance from the markets LDPE After a sharp rise in the price in the first week of August 2006 further sharp increase in the price was observed mainly due to stronger demand of LDPE in Asia. LDPE price showed a sharp increase from US$1370/MT to US$1400/MT The increase in demand of agriculture market in China would keep price of LDPE stronger in the rest of August 2006. LLDPE LLDPE showed even more stronger price rise and went up to US$1400/MT. Some sales were also seen at lower price but indications of September forward price indicates that its price would remain stronger between US$1400-1420/MT like LDPE has been showing an increasingly stronger demand but not as stronger as LDPE. Its price therefore rose by US 20/MT from US$1330/MT to $1350/MT. HDPE HDPE like LLDPE this week rose very sharply to the level of US$1400/MT. Some traders claim to get orders at the price of US$1370/MT but whether this price was valid for all the shipments in the last few days is not clearly known. Tighter supply and increase in price of ethylene were responsible for the price increase. September 2006 is expected to see price hike to almost US$1420-1440/MT. PP PP also like the other polyolefins gained sharply and the price prevailed was US$1400/MT. September 2006 is expected to see an increase in price further to about US$1440-1450/MT. Tighter supplies and higher price of propylene are two major responsible reasons for the stronger price of PP in August and September 2006. PVC PVC price remained practically flat at US$860/MT. The producers desire to increase the price to US$900/MT in September 2006 and are hoping that Chinese demand would revive due to the forthcoming agriculture season. PS After resisting the price increase in the first week of August 2006, GPPS price finally succumbed to the price increase of styrene monomer and went up to US$1350/MT. It is quite possible that September 2006 may witness the price of about US$1400/MT. ABS ABS continued a strong surge upwards and reached a level of US$ 1650/MT. September 2006 may see further increase to the level of US$1675-1680/MT.The price could go up at US$1700/MT. The stronger demand in Asia and feedstocks price are responsible for this sharp increase in the price of ABS Conclusion The first half of August 2006 showed a mixed trend in prices. While oil remained stable, ethylene, propylene, EDC and VCM showed some weakness or stability, styrene monomer & its polymeric derivatives (GPPS and ABS) showed a very sharp rise in prices. PVC also remained stable. However an increase in demand for agriculture in China could give some gain in PVC price in September 2006. September 2006 will continue to witness stronger prices of all four olefin polymers as well as styrenic polymers.