Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended December 6, 2010

CRUDE OIL In the week of December 6, 2010, crude oil futures hovered around their highest level since October 2008 in Asia amid the weakening dollar and strengthening oil demand during winter. The euro jumped to US$1.3375 from US$1.3210 late Thursday. An unexpected increase in the number of unemployed Americans failed to stall oil's momentum as it cruised to a 26 month high. Light, sweet crude futures for delivery in January rose above US$89 on the Nymex while January Brent crude on London's ICE Futures exchange rose to $91.6. NAPHTHA Naphtha prices in Asia have spiked to two year highs in the week of December 6, 2010. Shipments from Europe are set to almost triple, as Asian naphtha prices have risen on increased demand from China amid fuel shortages. Asia-bound naphtha cargo is likely to touch 290,000 tons this month. In China, October industrial output rose 13% from a year ago, amid a move by the government to cut energy consumption that is forcing factories to use diesel to power generators, prompting refiners to make more of the fuel instead of naphtha. Demand for naphtha in Asia may exceed supply by almost 800,000 tons in December, up from about 700,000 tons in October. ETHYLENE Ethylene prices have moved up in Asia in the week of December 6, 2010 on supply concerns in the region coupled with higher crude oil and naphtha prices. In Asia, spot ethylene prices on a CFR NEA basis gained US$70/ton over the past week as Chinese buyers actively seek overseas cargoes to help counterbalance an ethylene shortage in the country. China’s ethylene production is estimated to have dropped by about 10% as compared to November, as a surge in demand for fuel oils has resulted in naphtha shortage in the country. Prospective delays in the delivery of import shipments have also helped push up spot prices in the region as China’s port authorities assign priority to vessels delivering gasoil and naphtha shipments. PROPYLENE Propylene price have rebounded in the week of December 6, 2010, amid support from strong downstream PP markets. POLYMERS POLYPROPYLENE Polypropylene prices spiked in the week of December 6, 2010. December import PP offers in China continued being announced with massive increases of up to US$100/ton this week, propping up import prices in Southeast Asia by similar increases on initial December offers from overseas. Though supply is expected to be tight between December and January, it is unlikely to largely impact prices due to the lull season, as some PP production facilities in Asia have been shut, and two Middle Eastern producers have also shut their plants. As per Platts, Sinopec has shut a few lines on the back of the ongoing diesel shortage there. Refineries have been told to focus on producing more diesel and this has resulted in less naphtha being available to be cracked into propylene and ethylene. Zhenhai Refining & Chemical Company will shut its 300,000 tpa PP line over December 4-20; Shanghai Petrochemical's 400,000 tpa plant has been shut since November 15 and is expected to restart only in January; Sinopec's Maoming Company shut its 170,000 tpa PP line on December 1 for a 36-day turnaround. Thailand's Siam Cement Group is operating its PP plants at an overall capacity of around 70% due to a series of maintenance shutdowns, in line with the cracker shutdown at its feedstock supplier Rayong Olefins Company, said a company source. Malaysia's Titan Chemicals is also running its PP units at around 80% capacity due to propylene constraints as well as technical issues, according to a company source. Oman Polypropylene and Saudi Arabia's Advanced Petrochemicals Company have both shut their plants. Last week, Oman PP was forced to idle its 340,000 tpa polypropylene plant at Sohar for two weeks, due to feedstock shortage. The company faced a disruption in propylene supply from its supplier, Oman Refineries and Petrochemicals Company, which had shut its 75,260 b/d residual fluid catalytic cracker due to mechanical issues. Advanced Petrochemical Company shut its 450,000 tpa PP plant at Al-Jubail Monday on technical issues and it is expected to be shut for 10 days. POLYVINYL CHLORIDE PVC prices have spiked in Asia in the week of December 6, 2010. December deals were concluded US$30-40/ton higher than November in China and in Southeast Asia, regional sellers have announced December offers with increases from November done deal level on higher upstream costs.