Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of February 11, 2008

SUMMARY Oil prices rose to US$92 a barrel on Venezuelan President's threats to cut off oil sales to the United States as a retaliatory measure against legal moves by Exxon Mobil Corp. Naphtha prices stagnated. Ethylene and propylene prices dipped due to dull markets. Propped by higher upstream benzene values, Styrene Monomer prices rose. VCM prices rose, while EDC stagnated on weaker buying sentiments. Price of all polymers stagnated on weak demand from China due to the Lunar New Year Holidays, except that of LDPE. LDPE prices were mainly driven by demand from South East Asia. CRUDE OIL Oil prices rose to US$92 a barrel in the week of February 11, 2008. Venezuelan President Hugo Chavez's threats to cut off oil sales to the United States as a retaliatory measure against legal moves by Exxon Mobil Corp. to seize some Venezuelan assets, has sent oil prices up. ExxonMobil has sought the assets of Venezuelan state oil company Petroleos de Venezuela SA in American, British and Dutch courts, challenging the nationalization of a multibillion dollar oil project by Chavez's government. A British court has issued an injunction, freezing as much as US$12 bln in assets. Crude oil has also been moving up on news that oil exports from Nigeria, Africa's biggest oil producer and a major US supplier, could fall by as much as 1 million bpd due to the nation's deteriorating security situation and planned maintenance. Light, sweet crude for March delivery rose to US$92 a barrel in Asian electronic trading on the New York Mercantile Exchange. In London, Brent crude rose to US$92.19 a barrel on the ICE Futures exchange. NAPHTHA Naphtha prices steadied at US$855/MT levels in Asia in the week of February 11, 2008. Not much movement was witnessed in the market as the Chinese abstained from buying for almost a week until February 11. FEEDSTOCK ETHYLENE Demand for ethylene was slack on account of almost no activity in China due to the Lunar New Year holidays. Reduced demand from downstream markets exerted pressure on price of ethylene, compelling a reduction to US$1420/MT in the week of February 11, 2008. PROPYLENE Along with ethylene, propylene prices declined to US$1260/MT in the week of February 11, 2008. Weak demand from China due to the Lunar New Year Holidays was one of the major reasons for decline in prices. VCM VCM prices saw marginal movement, as prices climbed up to US$810/MT in Asia in the week of February 11, 2008. EDC EDC prices stagnated at US$435/MT in Asia in the week of February 11, 2008, on weaker downstream demand as China abstained from buying. STYRENE MONOMER Styrene Monomer prices rose past US$1350/MT in Asia in the week of February 11, 2008 on the back of rising feedstock benzene prices in Asia that have witnessed a sharp rise in demand from USA and Europe. These regions are currently short supplied because of an unplanned outage of Valero's 210,000 bpd refinery in Delaware City, USA, caused by a power loss. A sudden outage at Singapore Ellba's 550,000 tpa SM plant due mechanical trouble has also caused concerns about SM supplies in Asia for the next seven days till the repair work is completed. POLYMERS HDPE HDPE prices stagnated at US$1665/MT in Asia in the week February 11, 2008. Markets saw limited movement due to suspension of trading in China on account of the Lunar New Year holidays. Almost all the PE markets of China remained closed till February 11 as the domestic PE makers suspended sales from their branch offices. Before China went on its week long holiday, heavy snowfall in various regions had created an obstacle for scheduled delivery. These two factors have led to accumulation of inventory with producers. If transportation does not smoothen, prices could see an upward movement in those areas in China with short supply and a downtrend in the abundantly supplied regions. LDPE LDPE prices have spiked past US$1770/MT in Asia in the week February 11, 2008, mainly due to limited availabilities. Despite limited demand in the Chinese markets, prices were mainly driven by demand from South East Asia. Prices in the Far East region stagnated under US$1740/MT due to inactivity -a low price level at which producers from South Korea were unwilling to sell. LLDPE LLDPE prices stagnated at US$1630/MT in Asia in the week February 11, 2008 as unenthusiastic sentiments persisted on restricted buying in China. Weaker buying sentiments had led to price stagnancy before Chinese buyers went on a week long holiday. Markets saw limited movement due to suspension of trading in China on account of the Lunar New Year holidays. Almost all the PE markets of China remained closed till February 11 as the domestic PE makers suspended sales PP Polypropylene markets were very quiet in China, leading to price stagnancy at US$1490/MT in Asia in the week February 11, 2008. Almost all traders and plants were on holiday. PP prices are estimated to remain dull on subdued demand from North China. PVC PVC prices stagnated at US$1035/MT in Asia in the week February 11, 2008. Markets saw limited movement due to suspension of trading in China on account of the Lunar New Year holidays. GPPS GPPS prices in Asia stagnated at US$1410/MT in the week of February 11, 2008 due to lackluster demand from China on account of the Lunar New Year holidays. Buying continues to be limited, as traders await restocking of very low levels of inventory caused by obstacles in the transport and delivery system on account of unusually heavy snowfall last week. Restricted supplies due to persistent bad weather in some parts may not affect prices unless current subdued demand picks up dramatically. ABS ABS market stagnated at US$1745/MT on lifeless market conditions in China in the week of February 11, 2008. Driven by higher feedstock costs, producers are on the lookout to secure margins through a price increase. Selling intentions from Taiwan and South Korea remain pegged almost thirty dollars higher, in sharp contrast to sluggish buying sentiments. LG Chem has announced a US$200/MT hike in domestic prices for February delivery. Before the week long holiday, buying was reduced in China as the transport and delivery system was thrown out of gear by unusually heavy snowfall- this could continue if bad weather persists.