Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended January 11, 2010

CRUDE OIL Crude oil ended the week of January 11, 2010 at US$81.9 on the Nymex , falling from a 15-month peak of US$83.9 during the week. Crude has been rising in the week on freezing weather in the northern hemisphere, a weaker dollar and a report from China that exports had grown. Oil ended weaker towards end of week on forecasts of moderating temperatures this week in USA. NAPHTHA Naphtha prices have spiked to US$765/MT in Asia in the week of January 11, 2010 on robust demand in the region and in line with rising crude oil values. H2 February open-spec naphtha was assessed at US$770/MT CFR Japan. Benchmark naphtha crack spread strengthened to US$165/ton above Brent crude - just ten dollars short of a 20-month high peaked in December third week. The region will see increased supplies in the next few weeks on increased February lifting naphtha exports from India of 800,000 tons and the arrival in Q1 of 1.21 mln tons of Western naphtha. Demand-supply is expected to balance out in the coming few weeks as the additional volumes will be absorbed by the region’s strong demand and help markets cope with anticipated shortage caused by a delay in Kuwait's shipment of end-December and early-January cargoes to Asia and a 50-day maintenance shutdown at Saudi Aramco's Ras Tanura refinery. ETHYLENE IN line with rising feedstock naphtha price increases and robust demand from derivative markets, ethylene prices have propelled to US$1200/MT in Asia in the week of January 11, 2010. As sellers offers increase, February shipment ethylene prices have been gauged at US$1205/MT FOB Korea. PROPYLENE Propylene prices have escalated past US$1195/MT in Asia in the week of January 11, 2010 in line with robust crude oil and naphtha prices amid supply constraints coupled with rising demand from derivative markets. Supply concerns have resulted from problems in the upstream chain. EDC EDC prices have stagnated at US$485/MT in Asia in the week of January 11, 2010 amid quiet markets. Buying has been lackluster in the week as buyers await an increase in supplies from the Middle East. VCM VCM prices have been assessed at US$800/MT in Asia in the week of January 11, 2010 in the absence of notional offers for February shipment. However, a firm market outlook has been gauged in line with rising upstream and downstream costs. Increased offers have been heard and prices have been assessed at the eight hundred dollar mark despite limited deal conclusion. STYRENE MONOMER Pushed by robust demand in the region, Styrene Monomer prices have strengthened to US$1290/MT in Asia in the week of January 11, 2010. Sellers have increased offers to US$1300/MT FOB Korea for February shipment after deal conclusion about ten dollars lower. Feedstock benzene prices have escalated by over 50 dollars to US$1050/MT for February. POLYMERS Polyethylene prices in Asia have risen at the end of the week on aggravated shortage in the region. World number one PE supplier Saudi Basic Industries Corp. (SABIC) has suspended operations at its plants, halving its polyethylene and polypropylene supplies to long term Asian contract customers for the first two months of the year. A power outage in late December disrupted operations of the Yansab, Yanpet and Ibn Rushd petrochemical facilities, where SABIC is working to restore normal operations. The two crackers at Yanpet with combined ethylene capacity of over 1.7 mln tpa have been restarted in early January, but the 1.3 mln tpa Yansab cracker continues to be off line and may only resume operations by the end of the month. This cutback could be followed by reduced production of EG, VCM and PVC and possibly pull ethylene (C2) prices. Since SABIC does not export ethylene from Yanbu, ethylene prices have not been impacted, but if PE and MEG (mono ethylene glycol) prices go up, it could indirectly boost prices of the monomer. 40 day maintenance shutdowns at Maoming Petrochemical and Hainan Petrochemical around mid December have caused supply concerns in Asia, particularly China. A slow down in demand from processors is anticipated in the later half of the month as production rates start winding down at downstream processors ahead of the Lunar Holidays starting February 14. HDPE Robust demand from China has propelled HDPE prices in Asia to US$1345/MT in the week of January 11, 2010. After successful conclusion of January deals at US$1300/MT from Taiwan and about 25-40 dollars higher from the Middle East, February shipment offers for film grade have escalated. CFR China February offers from South Korea and Taiwan surged past the 1400 dollar mark on robust demand in the region. Price rise has been mainly driven by bullish sentiment triggered by high crude values in the past two weeks. LDPE LDPE prices soared to the 1500 dollar mark in Asia in the week of January 11, 2010, on limited avails amid robust demand from China. After successful conclusion of film grade deals at these levels, February shipment offers increased by an additional 25-30 dollars, while few CFR SEA offers from South Korea were heard above US$1550/MT levels. LLDPE Rising by almost ninety dollars, LLDPE prices rose to US$1445/MT in Asia in the week of January 11, 2010. Prices have been pushed up by limited avails in the region amid strong demand from China. February shipment CFR China offers have been increased by an additional fifty dollars from South Korea, after successful deal conclusion at US$1450/MT CFR China by a Taiwanese seller. POLYPROPYLENE Domestic PP prices in China started the week with large increases, pushing up prices in Asia to US$1300/MT in the week of January 11, 2010. Prices also found support from rising oil and naphtha markets. After successful conclusion of CFR China deals from South Korea for yarn/injection grades for January past US$1250/MT, sellers hiked offers to US$1300/MT, while the sellers from Taiwan increased their offers by an additional 30-45 dollars. Deals by suppliers from Taiwan and the Middle East were heard concluded at the 1300 dollar mark. POLYVINYL CHLORIDE Polyvinyl chloride prices have risen to US$975/MT in Asia in the week of January 11, 2010 despite absence of February offers. This was due to robust sentiments from China, where the domestic PVC market closed on a firm note amid mounting supply concerns on snowstorms in North China. Offers for ethylene based PVC in China rose as high as CNY8000/ton FD East China, cash inc VAT. Most CFR China deals for the month have been concluded at US$925-945/MT. As sellers hike initial offers to US$975/MT levels, February shipment offers are expected to rise to the thousand dollar mark. POLYSTYRENE Soaring SM prices have propelled Polystyrene prices in Asia in the week of January 11, 2010 to cope with rising production costs. Most South Korean and Taiwanese suppliers have increased CFR China offers for GPPS by almost 100 dollars to US$1440/MT, and for HIPS to US$1500/MT. Offers are expected to be hiked as producers continue to struggle due to weak production margin. In Asia, PS sellers implemented sharp increases on their January prices mainly due to factors including surging feedstock prices, supply concerns inside China triggered by delivery disruptions due to heavy snowfalls in the north of the country, intensive maintenance shutdown schedules and lower operating rates for Q1-2010 that contributed to the strong sentiment in the region ABS Driven by escalating feedstock values, ABS prices have risen past US$1710/MT in Asia in the week of January 11, 2010. CFR China offers from South Korea were heard at US$1730/MT levels, while those from Taiwan were heard about 15 dollars higher.