Price trends of oil, feedstocks & commodity polymers for the week of November 27, 2006

SUMMARY Oil gained back & attained the levels of US$59/barel in the week of 27 November 2006 week due to interruptions in transport logistics. Naphtha marginally increased due to increase in the oil price as well as the firmer demand of naphtha derivatives. Ethylene as well as propylene remained stagnant despite stronger demand from China for both PE & PP. EDC, VCM & styrene - feed stocks of commodity polymers, declined due to weaker market conditions. December 2006 either would see stability of these feed stocks or some decline due to either weaker demand of styrene, EDC & VCM. Ethylene & propylene could continue to remain stronger in December 2006 due to continued demand in PE & PP. All PE & PP gained due to surge in the demand from China. December will see further hardening in the price of PE & PP. PVC, GPPS & ABS in December 2006 could remain soft due to weaker market conditions of these polymers. OIL Oil price rose back to US$59/barrel in the week of November 27, 2006 possibly due to interruption of logistics in North Sea supplies and supply problems in Nigeria. The saving factor was an increase in the inventory in USA. NAPHTHA Due to rise in the price of oil, naphtha also marginally increased to US$538/MT in the week of November 27, 2006. However the increase in the price is not sustainable due to weaker off take of naphtha because of weaker demand of naphtha derivatives. December 2006 will see the price drop to US$530-535/MT. POLYMER FEEDSTOCKS ETHYLENE Ethylene price remained unchanged at US$1050/MT in the week of November 27, 2006 because of quiet market conditions. The customers were unwilling to pay a higher price & decided to utilize the existing stock & purchase only the quantity that was required. If oil price drops, both ethylene & propylene could either remain stagnant or decrease marginally. It is quite likely that ethylene could decline by US$10/MT & the price could reach US$1040/MT if not lower in December 2006. PROPYLENE Propylene also remained static at US$1100/MT in the week of November 27, 2006 because the customers were not willing to buy at a higher price. It is likely to decline to US$1080/MT in December 2006 once oil price slides back. EDC EDC declined marginally to US$400/MT in the week of November 27, 2006 because of almost 20KT cargo arriving from deep sea. The lack luster market conditions could permit the price to fall further. It is quite likely that the price could decline to US$380/MT in December 2006. VCM VCM price dropped significantly to US$600/MT in the week of November 27, 2006 from US$640/MT in the week of 20th November 2006. The bearish market condition of PVC is exerting downward pressure & will continue to do so in December. It is quite likely that the price could go down below US$600/MT in December 2006. STYRENE A sharp decline in price of benzene coupled with weaker market conditions compelled the producers to decrease the price of styrene monomer marginally from US$1255/MT last week to US$1250/MT in the week of 27th November 2006. December 2006 could witness further drop in the price of styrene due to weaker market conditions. Oil price stability could result into stability of styrene price in December 2006. POLYMERS LDPE LDPE price firmed up to US$1285/MT in the week of November 27, 2006 due to emerging stronger markets not only from China but also from other Asian regions. It is quite likely that the stronger market condition could exert upward pressure on price. It is quite likely that the price of LDPE in December 2006 could reach US$1300/MT. LLDPE LLDPE price also increased, but the price increase was not as much as that was seen in LDPE. It increased by US$5/MT & reached US$1270/MT in the week of November 27, 2006. The stronger market conditions could increase the price further to about US$1280-1290/MT in December 2006. HDPE HDPE, due to continued demand also increased to US$1285/MT in the week of November 27, 2006. It is quite likely that the price could strengthen to US$1300/MT in December 2006 although the customers are not yet willing to purchase at price beyond US$1285/MT. PP PP, because of firm market conditions, increased by US$10/MT & reached US$1270/MT in the week of November 27 2006. December 2006 will continue to exert the upward pressure on price due to continued demand rise in China & the other Asian regions. It is quite likely that the price could reach a level of US$1290-1300/MT in December 2006. PVC PVC declined to US$790/MT in the week of November 27, 2006 due to the bearish market conditions. The continued weaker market conditions could decrease the price of PVC as low as US$760/MT in December 2006. PS GPPS increased by US$10/MT from US$1330/MT in the week of 20, November 2006 to US$1340/MT in the week of 27 November 2006. This was mainly due to shortage in supply. December 2006 may witness further rise to US$1370/MT if not higher because of weaker profitability of producers. Only price reduction in oil coupled with decline in benzene price could bring stability at the present level. However most of the market players expect the price to remain stronger at the level of US$1370/MT. ABS ABS price lost the steam and lost whatever it gained in the week of 20 November 2006 due to quiet market conditions & reached US$1590/MT in the week of November 27, 2006. This was also due to drop in the price of both benzene & butadiene. The market expects the price of ABS to drop significantly to the level of US$1560/MT in December 2006.