Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of June 23, 2008

CRUDE OIL Crude oil prices dipped marginally to US$132 a barrel in a week full of ups and downs. US inventory levels dropped for the week, but had very marginal impact on prices. News that China plans to raise prices for gasoline by 16% and diesel fuel by 18%, in a move to ease global demand, saw oil prices drop by almost five dollars. Crude oil futures dipped to US$131.93 a barrel on the New York Mercantile Exchange after China disclosed its plans. China raised prices to ensure supplies by reducing the gap between soaring international crude prices and state-set domestic oil prices. Oil prices also dipped as Saudi Arabia announced plans to increase oil output by 200,000 bpd. The announcement followed Anglo-Dutch oil giant Shell reported shut down of a 200,000 bpd Nigerian offshore oilfield after an attack by militants. NAPHTHA Dipping crude oil prices exerted pressure on naphtha values in the week of Jun 23, 2008. Naphtha prices in Asia dipped to US$1145/MT in Asia. ETHYLENE Restricted availabilities continued to exert pressures on ethylene prices as they rose to US$1600/MT in Asia in the week of June 23, 2008. The persistent stringent supply situation has pushed up buying bids. PROPYLENE Like the ethylene markets, propylene markets of Asia were also plagued by a tight supply situation. The markets were also sustained at higher values by strong downstream Polypropylene markets. In the week of June 23, 2008, propylene prices gained by almost forty dollars to rise to US$1790/MT. STYRENE MONOMER Styrene Monomer prices dipped in Asia to US$1620/MT in the week of June 23, 2008. Prices have moved down in line with falling oil and feedstock benzene prices. As prices in USA dropped, benzene prices in Asia dipped to US$1295/MT FOB Korea. VCM VCM prices gained in Asia, rising to US$1005/MT in the week of June 23, 2008. The price hike was a result of increased offers for July by a player from Japan, in line with rising feedstock costs and stringent supply. However, downstream PVC market continues to remain sluggish in China. The market trend for VCM is expected to be slower in anticipation of resistance from downstream PVC makers in China. EDC EDC market continued to recover in Asia, rising to US$505/MT in the week of June 23, 2008. Strong feedstock ethylene prices have resulted in weaker production margins, hence sellers are not willing to settle at lower price levels. Along with strong upstream values, EDC prices that moved up by almost twenty dollars in the week, have also been supported by gains in downstream VCM and PVC rates POLYMERS HDPE HDPE prices did not see much movement, stabilizing at US$1825/MT in the week of June 23, 2008 as the market awaits offers for July shipment. As supplies continue to be limited, and feedstock ethylene prices continue to march north, key HDPE suppliers from Taiwan, Thailand, Malaysia and India have just started to open July offers at an inflated price of US$1850/MT CFR China. However, Iranian HDPE cargoes were being offered at US$1780/MT CFR China levels. LDPE Awaiting July offers, LDPE prices have stabilized at US$1930/MT in Asia in the week of June 23, 2008. A sharp hike in prices in anticipated for July shipment offers in line with higher EVA prices and limited supplies. Key Asian producers as well as Middle Eastern and SE Asian producers are targeting a price hike. Iranian cargo is being offered at US$1890/MT CFR China level. LLDPE Markets for LLDPE firmed up to US$1830/MT in Asia in the week of June 23, 2008. July shipment offers from Taiwan have risen to levels of US$1850/MT CFR China. PP Limited availability on one hand and robust demand from Chinese players on the other, have pushed up polypropylene prices to US$2010/MT in Asia in the week of June 23, 2008. Offers for July shipment from South Korea have deferred on account of the truckers strike in the country that is making trade difficult. However, few selling intentions was heard at around US$2040/MT CFR China. After successfully concluding deals at US$2020/MT, Taiwan's Formosa has intensified offers to around US$2050/MT CFR China levels. PVC Robust upstream feedstock values have exerted pressure on PVC prices in Asia in the week. PVC prices have moved up to US$1220/MT in the week of June 23, 2008. Offers for July shipment from a Taiwanese major were hiked by over fifty dollars from June offers. Formosa's export of PVC will be at a reduced level next month on account of reduced running rate to combat rise of utility costs and higher feedstock prices. Offers from Japan were at levels of U$1250/MT, while the markets await offers from South Korea. GPPS Lackluster market sentiments could not do much to contain polystyrene prices this week. GPPS prices moved up to US$1765/MT in Asia in the week of June 23, 2008. Higher feedstock values have led to poor price realization, keeping GPPS prices at higher levels. ABS Increasing cost pressures on account of rising feedstock butadiene prices have pushed ABS prices up to US$2180/MT in Asia in the week of June 23, 2008. Few deals were concluded on increasing resistance from buyers, despite majority quotes from S. Korean and Taiwanese suppliers set above US$2200/MT. In fact, rising cost pressure will prompt yet another price hike.