Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of January 19, 2009

CRUDE OIL Crude oil prices ended the week of January 19, 2009 on a lower note than last week. Friday saw oil prices rebounding on concerns of OPEC production cuts on one hand, and release of data by the International Energy Agency's showing an unexpected sharp decline in global demand forecasts, on the other. New York's main contract, light sweet crude for delivery in February, rose by over one dollar to US$36.51 on the NYMEX. Brent North Sea crude for March delivery remained at US$46.57 on London's ICE. For 2008, the IEA put global oil demand at 85.8 mln bpd, down 0.3%. IEA has reduced its oil demand projection by for 2009 by 0.6% from revised 2008 figures - to one mln bpd to 85.3 mln bpd, representing a fall of 0.6% from revised 2008 figures. NAPHTHA In the week of January 19, 2009, naphtha prices have risen by over 25-30 dollars to US$400; their highest level in three months. As downstream demand recovers, key players in Taiwan and South Korea are mulling a hike from reduced levels in run rates. Open-spec naphtha for H2- Feb delivery has escalated to US$400/MT CNF Japan. ETHYLENE Rising prices of downstream PE along with increased naphtha values have pushed ethylene prices up in Asia in the week of January 19, 2009. After conclusion of FOB Korea deal at US$610/MT, sellers have hiked offers for February shipment by ten dollars. Key producers in South Korea and Taiwan are starting to hike run rates at crackers in a bid to meet increasing demand in a recovering market. PROPYLENE Recovering downstream markets along with restricted supplies due to reduced cracker run rates have driven propylene prices up to US$595/MT in the week of January 19, 2009. FOB Korea seller's intent has been heard above US$600/MT, while buying interest has been pegged about 10 dollar lower. EDC CFR China EDC prices gained strength to US$155/MT in the week of January 19, 2009 on buoyant ethylene values and mounting downstream VCM and PVC values. Market outlook continues to be optimistic as demand seems to be on a recovery path, and as ethylene values seem to be increasing, CFR China offers from Taiwan have been heard at US$200/MT for the first time in over 7-8 weeks. VCM A rally in feedstock EDC values as well as downstream PVC prices have supported a hike in VCM prices to US$525/MT in Asia in the week of January 19, 2009. February shipment CFR China offers from Taiwan as well as Japan were being quoted at US$555/MT levels. A positive markets outlook will keep CFR China values about 15-25 dollars higher. STYERENE MONOMER Styrene Monomer prices have risen to US$620/MT in Asia in the week of January 19, 2009 on the back of accelerating feedstock ethylene and benzene values that have triggered demand on prospects of future price rise. Despite elevated interest from buyers, sellers have maintained February delivery FOB Korea prices above US$625/MT. Feedstock benzene values have also shot up by about 25 dollars. As naphtha prices seem to be on an upsurge, benzene prices are estimated to rise to US$370/MT. POLYMERS HDPE Rising feedstock naphtha and ethylene prices denote that feedstock markets have bottomed out and are on an uptrend, instigating buyers to initiate stockpiling, building up demand in the region, particularly from China. HDPE prices have moved up to US$915/MT in Asia in the week of January 19, 2009. After successful conclusion of CFR China deals at a maximum of US$920, most offers have been hiked by about 10-20 dollars by Asian as well as South East Asian producers. LDPE LDPE prices have moved in sync with rising feedstock values that have succeeded in encouraging demand recovery, pushing prices to US$925/MT in Asia in the week of January 19, 2009. Encouraged by recovering demand from China, sellers from South East Asia and the Middle East have hiked CFR China February shipment offers to around US$945-950. Prices could come under pressure with Iran's Arya Sasol's 300,000 tpa LDPE plant coming onstream toward the end of the month. LLDPE LLDPE prices have moved in tandem with rising feedstock ethylene, supporting demand recovery, pushing prices to US$900/MT in Asia in the week of January 19, 2009. Most sellers increased offers by 10-20 dollars, with CFR China offers from Taiwan at US$925/MT. POLYPROPYLENE Robust increase in upstream propylene values has induced an increase in polypropylene prices to US$800/MT in Asia in the week of January 19, 2009. CFR China offers February shipment for yarn grade have been heard at varying levels, the lowest being from the Middle East at US$800/MT, about 10-20 dollars higher from South Korea, with the highest offers from Taiwan at US$825-840. PVC PVC prices have risen to US$665/MT in Asia in the week of January 19, 2009 on rising feedstock prices and raised offers. After successful conclusion of CFR China February shipment deals at US$670-700/MT, sellers from Taiwan, South Korea and Japan have hiked offers by almost 10-30 dollars. However, buying interest remains low key as the buyers are wary of the lasting nature of the price increases and prefer to tread in caution. GPPS GPPS prices have inched up to US$720/MT in Asia in the week of January 19, 2009, in tandem with rising Styrene Monomer values. CFR China offers for February from South Korea and Taiwan were heard upto US$740/MT, but cautious buying maintained buyers interest about 20 dollars lower. ABS Dismal performance and outlook of the automotive industry continues to depress the m ABS markets in Asia. Prices continue to hover around US$1005/MT in the week of January 19, 2009. Buyers have expressed an interest to buy at around US$1000/MT in response to seller's offers of US$1030/MT. Prices are not expected to perk up in the next few weeks on a gloomy outlook of the automotive sector and the forthcoming Chinese Lunar New Year holiday.