Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended January 4, 2010

CRUDE OIL Crude Oil prices have risen to US$80/barrel in New York in the week of January 4, 2009 on predictions of a colder than normal winter that lifted expectations of stronger oil and natural gas demand in USA. An upward momentum in oil prices was maintained in the Christmas week amid continuing tensions in Iran between opposition supporters and the government; and dropping temperatures. NAPHTHA Naphtha prices in Asia have opened on a high note in the week of January 4, 2010 on strengthening crude oil prices, robust petrochemical demand from China and low arbitrage from Europe. Open-spec naphtha for H2-February delivery was assessed at US$730/MT CFR Japan. Strengthened by robust petrochemical demand from China, prices are expected to climb higher this week. Additionally, Asia is also faced with low arbitrage supply as frigid temperatures in Europe hamper shipments to the East. ETHYLENE Ethylene prices have increased to US$1140/MT in Asia in the week of January 4, 2010 on a combination of tight supply and strong demand from downstream sectors. Avails in the region have been limited on reduced supplies from Iran, the largest Middle East supplier of ethylene to Asia. January shipment offers were heard to have crossed US$1220/MT FOB SE Asia, indicating a generous spread to naphtha prices, and could lead to a possible wide profit margin for regional steam cracker operators, providing an impetus to increase run rates. PROPYLENE Propylene prices have moved up to US$1140/MT in Asia in the week of January 4, 2009 in line with healthy crude oil prices and supply constraints in the region amid rising demand from derivative markets. Supply concerns for propylene resulting from problems in the upstream chain were responsible for the price hike. EDC EDC prices have inched up to US$495/MT in Asia in the week of January 4, 2010 in line with robust oil and feedstock prices amid healthy derivative demand in the region, particularly from China. Feedstock ethylene prices in Asia seem set to peak to fresh highs in 2010. VCM VCM prices have moved up to US$780/MT in Asia in the week of January 4, 2010 in line with rising feedstock values amid steady downstream demand. Producers have offered January shipment cargoes at US$800/ton CFR China. STYRENE MONOMER Styrene Monomer prices have risen to US$1230/MT in Asia in the week of January 4, 2010 in line with rising feedstock benzene values. Tightness in the US and European benzene markets have kept benzene prices high at US$1080/MT in Asia, along with strong crude futures and bullish sentiment. POLYMERS 40 day maintenance shutdowns at Maoming Petrochemical and Hainan Petrochemical around mid December have caused supply concerns in Asia, particularly China. Also compounding the supply scene last month were production issues at Yangzi and Qilu, that have been resolved as per ICIS. Price of the polyethylenes and polypropylene have increased this week on firm offers by regional suppliers amid tight regional supply and high prices of feedstocks ethylene and propylene. Inventory level with PE and PP producers is low due to low run rates since H1-December caused by supply constraints of feedstock ethylene and propylene. Stocks will get replenished by several Chinese players with the arrival of import cargoes booked in the past two weeks. This will coincide with an anticipated slow down in demand 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 HDPE prices have risen to US$1275/MT in Asia in the week of January 4, 2009 amid robust demand from China and rising domestic prices, along with bullish upstream costs. In Southeast Asia, several buyers were disappointed by the rising trend as they had hoped to see lower domestic prices for 2010 along with the implementation of the ASEAN-6 free trade agreement. LDPE LDPE prices spiked to levels of US$1435/MT in Asia in the week of January 4, 2010, amid supply constraints and rising feedstock prices. LLDPE Restricted avails have pushed up LLDPE prices in Asia past US$1360/MT in the week of January 4, 2010. Along with a lack of supplies with sellers in Asia, prices rose on supply concerns due to reduced run rates at a plant in Taiwan, along with domestic price increases in a bullish market in China and a positive trend observed recently in LLDPE futures prices in China. As the market awaits offers from the Middle East, January shipment offers from South Korea spiked by over forty dollars to US$1400/ton CFR China. Market supply will tighten further in anticipation of limited supplies in January due to a shutdown at Maoming. POLYPROPYLENE Polypropylene prices rose to US$1220/MT in Asia in the week of January 4, 2010 on rising feedstock costs. After successful conclusion of deals at these levels, January shipment offers for injection/yarn grade were heard at US$1240/MT CFR China. POLYVINYL CHLORIDE Polyvinyl chloride prices have risen to US$955/MT in Asia in the week of January 4, 2010 due to high price of ethylene despite a seasonal lull in demand generally seen during the harsh winter in China. Domestic Chinese PVC producers were reported to increase their offer levels for both acetylene and ethylene based PVC in China on improved market sentiment, tight supplies and higher production costs amid heavy snowfall in North China. Gains are expected to be limited on weakening demand until mid-February when China closes for a week long Lunar New Year holidays. POLYSTYRENE Polystyrene prices have increased to US$1325/MT in Asia in the week of January 4, 2010 amid rising costs of feedstock SM and healthy demand from China. ABS ABS prices have been driven up past US$1600/MT in Asia in the week of January 4, 2010 on increased costs of SM and butadiene.