Price trends of oil, feedstocks & commodity polymers for the week of November 20, 2006

SUMMARY Oil declined sharply and reached US$56/barrel in the week of November 20, 2006. It is likely to fall further in December 2006. Naphtha again slipped back and reached US$535/MT. December 2006 may witness further decline in the price of naphtha. Ethylene declined marginally despite revival of demand in PE in China. Propylene however remained flat. All other feedstocks remained stable. Oil price decline could influence the prices negatively in December 2006. Only strong demand scenario could pull up the prices of feedstocks. All PE as well as PP gained by US$15/MT while PVC remained dull and static. GPPS & ABS gained marginally by US$10/MT. The weaker price of oil could influence the decline of all commodity polymers in December 2006 either marginally in PE or PP due to demand revival or more in the case of PVC. GPPS & ABS could also increase in the price due to strong pull from markets. OIL Oil dropped by 6% to US$56/barrel a largest drop in the last one year. One of the possible reason is that US is experiencing warmer weather. Non-OPEC countries also have increased their production of oil in the recently. It is expected to fall below US$55/barrel in December 2006. NAPHTHA Naphtha again lost heavily due to sharp decline in oil price & reached US$535/MT in the week of 20th November 2006. It is likely to remain softer in December 2006. POLYMER FEEDSTOCKS ETHYLENE Ethylene price decreased by about US$10/MT and reached US$1050/MT despite strong demand of PE from China. While the suppliers were keen to up the price the customers were willing to wait & watch the trend. Ethylene is likely to remain range bound between US$1030-1040/MT. It is not known the sudden rise in demand of PE from China will continue. If it does, the price could become stronger by US$10-20/MT in December 2006. PROPYLENE Propylene remained stagnant at US$1100/MT because the customers were not willing to buy at a higher price. It is likely to remain range bound between between 1070-1090/MT in the later half of November 2006. It can further fall in December 2006 to US$1050/MT. EDC There was no change in the price of EDC in the week of November 20, 2006. It remained at US$405/MT. The lack luster market would compel the price to fall below US$400/MT or even to US$380/MT in December 2006. VCM VCM remained quiet in the week of 20 November 2006 with no change in the price that remained at US$640/MT. The price could roll over or may witness some drop to US$625/MT in December 2006. STYRENE The higher price of benzene used in manufacture of styrene monomer could not affect the price of styrene monomer of US$1255/MT in the week of November 13 2006. The market of styrene derivative appears to be quiet or even bearish. December 2006 price is seen at around the same price of US$1250-1255/MT. It could even fall if the market does not revive. POLYMERS LDPE An increased demand of PE from China made price of LDPE to rise to US$1275/MT. The suppliers are not wiling to decrease the price below US$1260/MT. LDPE could become expensive in December 2006 due to revival of demand from China. The price expected for December 2006 is around US$1280/MT if not higher. LLDPE LLDPE like LDPE also increased in price from US$1250/MT to US$1265/MT in November 20 2006 week. It is likely that price would not go down in December2006 below US$1260/MT. In fact, the rising demand in China could increase the price to US$1275/MT in December 2006. HDPE Sudden demand surge from China was responsible for HDPE to go up from US$1260/MT to US$1275/MT in 20, November 2006 week. The price could get harder. December 2006 may witness price of US$1290/MT. PP PP became stronger in the week of 20th November 2006 due to strong pull from China due to revival of demand. If the demand continues to remain stronger in the coming few weeks December 2006 may see a price of US$1290- 1300/MT. PVC PVC was static at US$800/MT due to quiet market conditions. PVC remained quiet with stability of price at US$800/MT. The market expects December 2006 to be sluggish because of lower demand from China due to season. It is quite likely that price of PVC would fall below US$800/MT to a level of US$780/MT in December 2006. PS GPPS due to an increase in market conditions gained US$10/MT and reached US$1230/MT. In fact December 2006 delivery is quoted at US$1260/MT. Most of the raw material suppliers are running the plants at lower throughput and are therefore in mood to raise the price. ABS ABS price also gained by US$10/MT and attained a level of US$$ 1600/MT in the week of November 202006. The suppliers are being quoted to offer the material at US$1630/MT. December 2006 may see the price of US$1625-1630/MT.