Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended May 12, 2008

CRUDE OIL Crude oil futures spiked past US$126 per barrel in New York in the week of May 12, 2008, rising on forecast of growing demand and a weakening dollar vs Euro. The dollar has further weakened vs the euro on signs that the European Central Bank will keep rates at a six-year high to cut inflation. A weaker dollar prompts investors to buy commodities as a hedge against the currency's decline. This gain of almost 9 dollars in one week is the largest gain in over one year. On the supply side, output from Nigeria fell to the lowest levels this decade in April because of a strike and attacks on oil installations. NAPHTHA Rising in line with oil prices, naphtha prices in Asia spiked by fifty dollars past US$1000/MT in Asia in the week of May 12, 2008. Even as demand, pressured by high prices, waned, open-spec naphtha prices for H2-June shipment rose to US$1005/MT CNF Japan. ETHYLENE Supported by very tight supply from Asian producers and stronger upstream prices, ethylene prices rose to US$1420/MT in the week of May 12, 2008 in Asia. Supply continues to be more stringent as unplanned outages were declared at three crackers of YNCC. Despite absence of offers from the sellers, market sentiments continue to be robust. PROPYLENE Propylene prices in Asia rose to US$1430/MT in the week of May 12, 2008. Market sentiments for propylene continue to be robust on stronger oil and naphtha prices as well as restricted supply due to unplanned outages at crackers in South Korea. VCM Lackluster markets for VCM kept prices at last weeks' US$955/MT in Asia in the week of May 12, 2008. Markets were listless as they await June offers from Japanese suppliers. Offers for June are projected to spike by atleast 30-40 dollars in line with rising oil and naphtha values. EDC Lower selling interest kept EDC prices stagnant at last weeks' US$445/MT in Asia in the week of May 12, 2008. Despite quantum increase in naphtha and feedstock ethylene costs, EDC prices have witnessed very marginal rise, leading to poor production margins. This poor price realization has lead to a cutback in operating rates as well as in export volumes despite buying interest from China. STYRENE MONOMER Prices of Styrene Monomer saw a huge jump of over fifty dollars in line with rising oil, naphtha and benzene values, as prices moved up to US$1500/MT in Asia in the week of May 12, 2008. Though buying intentions were heard atleast ten dollar lower, spot talks were relatively dull. POLYMERS HDPE Restricted supplies in the region coupled with higher ethylene values have kept HDPE prices at US$1630/MT in Asia in the week of May 12, 2008. As deals were concluded at US$1640/MT levels, newer offers were heard at above US$1650/MT CFR China levels. LDPE Markets for LDPE did not show much movement as prices inched up marginally to US$1785/MT in Asia in the week of May 12, 2008. Inactivity prevailed as limited cargoes were available for May shipment due to unplanned outage at crackers in South Korea. Hanwha Chemical had sold May cargoes, but has suspended all LDPE offers with immediate effect after unexpected outage at its 285,000 tpa LDPE plant. Supply woes will continue as LG Chemical Ltd. plans a week long maintenance shut down its 150,000 tpa LDPE plant in Yeosu LLDPE A ten dollar hike pushed LLDPE prices up to US$1655/MT in Asia in the week of May 12, 2008. Markets gained strength due to a limited supply situation. After conclusion of deal at US$1645/MT CFR China, Formosa has announced a price hike of almost twenty dollars. PP Propped by restricted availabilities and rising feedstock prices, polypropylene prices in Asia moved up to US$1610/MT in the week of May 12, 2008. After successful conclusion of deals at these levels, sellers have hiked offers for H2 May shipment by about twenty dollars on news of suspension of production at S.Korea's Polymirae's PP plant following YNCC's cracker outage. Restart of Polymirae's PP plant is dependent for feedstock supply on resumption of operation YNCC naphtha crackers. PVC Awaiting offers for June, a calm prevails in PVC markets of Asia, even as firm market sentiments continue. PVC prices have stagnated at last weeks' US$1170/MT in Asia in the week of May 12, 2008. However, prices are estimated to spike past US$1200/MT for June as sellers in Taiwan and Japan plan a hike in line with robust feedstock prices. GPPS GPPS prices in Asia moved up to US$1520/MT in the week of May 12, 2008. The markets remained quiet as surging SM feedstock prices have kept May offers suspended. As feedstock styrene prices have jumped by over forty dollars this week, production margins for GPPS producers continue to worsen. Despite absence of buying, prices are estimated to rise by a further twenty dollars. ABS Higher upstream butadiene, ACN and SM costs have pushed up ABS prices to US$1880/MT despite dull buying sentiments. Rising feedstock costs continue to exert pressure on producers margins, prompting a twenty dollar price hike for May shipment.