Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of January 28, 2008

SUMMARY Bolstered by an improvement in the US economic sentiments, crude oil prices moved up marginally. Naphtha prices moved up in tandem with optimistic crude prices. Ethylene prices that have been moving north in the past few weeks, stagnated as buying intentions were pegged lower than offers. Limited supplies due to plant problems have pushed propylene prices higher, even as most buyers are reluctant to buy at these levels. VCM prices rose in line with higher feedstock costs. An attempt to raise EDC prices on account of higher feedstock costs was met with lukewarm response from buyers, stagnating prices. Styrene Monomer prices stagnated. HDPE and LDPE moved up on bullish upstream ethylene market. LLDPE, PP, PVC and ABS prices stagnated. CRUDE OIL Improvement in US economic sentiments has kept crude oil futures about 1% higher than last week's prices. Crude oil futures inched up to US$90.7 in New York, as optimistic economic outlook toned down fears of diminishing demand from USA. Announcement of an economic stimulus package mid week has raised hopes that USA may avoid recession, eventually leading to a gradual recovery in prices. NAPHTHA Naphtha prices in Asia rose to US$845/MT in the week of January 28, 2008 on the trail of optimistic crude oil market. Open-spec naphtha values for H1-March delivery rose by around 10% this week. FEEDSTOCK ETHYLENE Ethylene prices in Asia stabilized at last weeks' US$1450/MT in the week of January 28, 2008, as general buying sentiments remained lower than selling offers. A gap of over fifty dollars existed in the ethylene market between selling intentions from S.Korean suppliers and general buying intent in SE Asia region at around US$1350/MT CFR SE Asia. However, subdued buying sentiments in this region did not succeed in dampening the market, as evident from a deal for Iranian cargo was heard done at US$1400/MT CFR SE Asia. PROPYLENE As supplies remained restricted due to plant problems, propylene markets maintained an uptrend. Propylene prices spiked to US$1320/MT in Asia in the week of January 28, 2008. Scarce inventories causing a short supply situation, has led to inactivity in the market; while most buyers are hesitant to buy at levels above US$1250/MT FOB Korea as downstream PP prices have not moved beyond US$1450-1470/MT CFR China. Buying sentiments from China has not caused much movement in the markets, as they continue to be supplied well by local producers. VCM VCM prices continued to be firm in Asia in the week of January 28, 2008 at US$790/MT in a bid by sellers to recover higher input costs. Japanese suppliers managed to conclude deals with Chinese buyers at US$780/MT CFR China, almost thirty five dollars more than December price. VCM from South Korea commanded a price of US$790/MT CFR CMP for January delivery. February will see a hike of almost thirty dollars on dual forces of good downstream PVC as well as high feedstock ethylene prices. EDC Subdued trading in Asia led to a stable EDC price structure at US$435/MT in the week of January 28, 2008. Sellers are unwilling to move from their prices in a bid to recover higher costs of feedstock ethylene, but buying interest from China remains lower, leading to a deadlock in the market, a situation where quotes are not being heard from sellers. STYRENE MONOMER Styrene Monomer prices in Asia stagnated at last weeks' level of US$1325/MT in the week of January 28, 2008. Interestingly, the deals for March shipment were done between US$1300-1335/MT FOB Korea level, while market prices for February shipment were assessed lower at less than US$1325/MT FOB Korea. Feedstock benzene market in Asia saw stable prices this week. POLYMERS HDPE Buoyant ethylene markets in Asia have bolstered HDPE offers in the week of January 28, 2008. HDPE prices moved up to US$1655/MT in Asia propped by bullish feedstock ethylene prices. Many deals for February shipment were heard at the level of US$1660-1670/MT CFR China from Thai as well as Japanese suppliers. LDPE LDPE prices rose to US$1715/MT in Asia in the week of January 28, 2008, mainly on account of dual forces of limited supplies and bullish upstream ethylene market. As offers from Middle East as well as Malayasia continue to range between 1730-1745/MT CFR China, prices are estimated to continue rising . LLDPE LLDPE markets in Asia saw little movement as prices remained at last week's US$1630/MT in the week of January 28, 2008. As the supply situation tightened, offers from suppliers for February were heard in the range of US$1630-1650/MT CFR China. PP Polypropylene market sentiments in Asia have dampened in the week of January 28, 2008 as its major consumer China, moves towards it Lunar New Year holiday season next month. PP markets remained lackluster as prices stagnated at US$1480/MT. However, burdened by rising feedstock propylene prices, major producers from South Korea and Taiwan intend to hike February offers for yarn/injection grade at US$1510/MT CFR China, notwithstanding buying intention from China currently lingering in the range of US$1470/MT CFR CMP. PVC A drastic reduction in PVC exports by the Japanese players due to a scarcity of upstream ethylene feedstock has led to limited supply situation in Asia this week. Restricted availabilities have sustained polyvinyl chloride prices in Asia at US$1035/MT in the week of January 28, 2008. the listless market was a result of limited supplies accompanied by meager activities. Interestingly, some selling intention remains pegged higher by twenty dollars corresponding with rising input costs, despite a lull in demand from China ahead of the approaching Lunar New Year Holiday. It is estimated that prices for February could see an uptrend. GPPS GPPS prices slipped to US$1420/MT on restrained demand in Asia, particularly from China in the week of January 28, 2008. The approaching Lunar New Year holiday has kept buying intentions from China low. Attempting to keep sagging end user demand alive, sellers have been coerced to offer a reduction in HIPS as well as GPPS prices. In a bid to cope with reduced demand, polystyrene producers have had to cutback on nameplate capacity to reduced stock piles. Market sentiments are estimated to be optimistic when the players return from Lunar Holiday break. ABS Asian ABS market was relatively steady in the week of January 28, 2008, as prices stabilized at US$1755/MT. Rising feedstock butadiene costs have pushed producers to raise February offers by ten to fifteen dollars- but has met with little response from the buyers. Despite this, an upsurge in input costs has led to fresh offers for February shipment being quoted atleast thirty dollars higher.