Price trends of oil, feedstock and commodity polymers in Asia for week of August 28, 2006

OIL This week saw oil prices bleep upwards due to threats of possible conflict over Iran's nuclear possibilities as well as approaching tropical storm off the US coast. After witnessing a rise to about US$ 72/barrel for a day, prices moved southwards again and finally settled just below US $71/barrel. September 2006 may continue to see some stability in price of oil. NAPHTHA After remaining low, the price slightly firmed up to US$635-636/MT. Unless demand is increased we do not foresee a significant revival of naphtha price in September 2006 ETHYLENE Ethylene continued to move upwards due to supply constraints and shutdowns of several crackers in Asia. The present price of ethylene jumped very sharply by about US$50/MT and reached US$1350/MT. September 2006 will see price range between US$1350-1370 if not higher. The stronger demand and flow of supplies will determine price in September 2006. Oil softening could provide some relief in the price of ethylene in September 2006. London Metal Exchange predicts price of US$1350 /MT in September 2006. PROPYLENE Propylene price practically remained at the same level as that of the last week (US$ 1290-1300/MT). It is likely to inch up marginally in this week, but September will witness a price range between US$1330-1350/MT. Only softening of oil price could provide some relief in September 2006. EDC EDC price, after surging strongly last week, remained stable at the level of US$390/MT in the week of August 28, 2006. Some trades are believed to have taken place at US$400/MT on account of stronger demand. September 2006 will witness a stability in prices, with scope for a marginal increase to US$ 410-420/MT. VCM A strong demand of PVC from China and an increase in ethylene price continues to exert a strong pull in price in the week of August 28, 2006. Supply is quite tight and demand is expected to be strong in September 2006, resulting in a price increase to at least to the level of US$730-750/MT. STYRENE Styrene price, after showing sign of softness in the week of August 21, 2006 remained practically flat at previous week's level and hovered around US$1270/MT. The weakening demand of both PS and ABS did not help in maintaining a higher price of styrene. Styrene price may not see any further dramatic increase in September 2006. LDPE LDPE price, after continuously rising in the month of August 2006, lost steam and remained stable at the same level as that existed in the previous week (US$1420/MT). Some resistance from the processors seems to be building as they are not willing to purchase LDPE at higher price. September 2006 is likely to see price range of US $1430-1450/MT. LLDPE LLDPE market remained slightly subdued due to resistance from processors to purchase at a higher price that raw material suppliers are offering. The price was maintained at US$1400/MT in August 28, 2006. September 2006 could see some relief only because of weakening of oil price. However, stronger demand could continue to exert price pressures and the price in September could attain a level of US$1430-1450/MT. HDPE HDPE price, like those of LDPE & LLDPE remained stable at US$1420/MT in August 28, 2006. September will continue to be firmer for price of HDPE unless oil price softening exerts a positive effect. PP PP like PE also remained flat in the week of August 28,2006 at US$1420/MT. September 2006 is expected to see a further increase in price to about US$1430-1450/MT. London Metal Exchange also predicts the September price around US$1430/MT. PVC PVC continued to show a sign of strength for the second week in a row after remaining stable and flat for several weeks earlier. From US$910/MT in the last week, prices rose to US$940/MT. Persistent strong demand in the Chinese market will continue to exert price pressure. It therefore is quite likely that September 2006 will see a continuous rise in the price and it may reach a level of US$920-940/MT. PS PS market seems to have softened somewhat - the price of PS therefore marginally declined in the week of August 28,2006 to US$1340/MT. September could witness further erosion of price to about US$1310-1320/MT. ABS ABS like PS also softened due to weaker demand in the week of August 28, 2006 ultimately bringing down the price lower to US$1640/MT from US$1650/MT that prevailed in the last week. September 2006 may see no further increase. In fact there is a possibility of some softening to US$1620-1630/MT unless the demand picks up in China due to forthcoming Christmas festival. Conclusion Iranian nuclear threat and tropical storm that did not take place did not cause any harm to oil price. It moved southwards and settled just below US$71/barrel. Oil price reduced significantly in the week of August 21 2006. September 2006 is likely to witness stability of oil at this level. Naphtha became slightly stronger but it is not likely to see a significant upward movement in September 2006. Ethylene rose very sharply while propylene went up marginally. Tight supplies and closure of several Asian crackers due to maintenance were the two prime reasons for a sharp rise in price of ethylene. Some resistance from processors is seen both in PE & PP resulting in weaker demand for these polymers and in turn of feedstock. EDC remained stable but VCM showed an increase due to stronger demand of PVC. Only PVC showed a stronger price rise in the week of August 28,2006 while PE & PP saw some resistance from processors. Both PS & ABS lost steam and got reduced in price by a small margin. September 2006 may see oil stable at US$71-72/barrel. Ethylene and propylene could become stronger in price if the resistance from processors dissolves because the demand is strong. VCM could remain firmer in September 2006. Stronger demand and high price of feedstock will exert price pressures on PE, PP and PVC while PS and ABS may not see any significant change and achieve some price stability in September 2006 or may attain some softness.