Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of December 10, 2007

SUMMARY Crude oil prices slipped marginally on reports that fuel inventories are sufficient to meet the demand form the Northern Hemisphere this winter. Naphtha prices have seen a marginal uptrend. VCM prices rose amid a hike in sellers' offers, and EDC stagnated on waning demand from vinyl producers. Ethylene prices have risen on reduced output from producers on one hand and bullish downstream Polyethylene markets on the other. Market for propylene gained strength on positive outlook in downstream PP values and a rise in buying interest. Styrene Monomer prices did not see much movement. HDPE prices rose in line with persistently robust demand, LDPE prices moved up on continuing limited supplies, and LLDPE prices rose with support from strong HDPE prices as well as growing market demand. PP prices rose on restricted influx of deep-sea cargoes from USA, while PVC prices moved up as buyers await January offers. GPPS prices dipped on restrained buying interest from China, while ABS prices stagnated. CRUDE OIL Crude oil prices moved down marginally, dipping to US$88.28 in New York in the week of December 10, 2007. Markets softened on estimates that fuel inventories in USA are sufficient to meet Northern Hemisphere demand this winter. NAPHTHA A marginal upward movement was seen in naphtha prices in Asia in the week of December 10, 2007. Naphtha prices inched up to US$850/MT CNF Japan level for 2H of January shipment. FEEDSTOCK VCM VCM prices recorded a hike, moving up to US$750/MT in Asia in the week of December 10, 2007. VCM prices have gained strength in the Asian markets amid a quick upsurge in sellers' offers. In fact, December offers were heard quoted higher by almost thirty dollars - at levels as high as US$770/MT CFR China. This sharp hike can be attributed to an ongoing rise in naphtha prices; and has been met with some opposition from the buyers from China. The sharp difference in sellers' offers and buying intentions has resulted in an absence of deals. EDC EDC prices stagnated at last weeks' US$400/MT in Asia in the week of December 10, 2007, mainly on waning demand from vinyl producers. A difference of almost twenty dollars exists between sellers quotes pegged at US$400-410/MT CFR Asia, and bids from Chinese end users. The persistently low buyers' bids have forced few downstream VCM producers to cut operating rates due to poor production margins. ETHYLENE Augmented by dual forces of reduced output from South Korean and Chinese producers on one hand and bullish downstream Polyethylene markets on the other, ethylene prices spiked to US$1265/MT in Asia in the week of December 10, 2007. In a bid to maximize production margins, majority of Korean producers chose to utilize ethylene inventories for captive consumption in polyethylene production. Absence of fixed offers from the spot market kept market activities subdued. Additionally, ethylene output reduction to the tune of 3,000 mt/day has been ordered by Sinopec at 8 ethylene plants in an effort to recover a shortfall of fuel and heating oil supply in China PROPYLENE Propylene markets in Asia spiked to US$1145/MT in the week of December 10, 2007. Market for propylene gained strength on account of a positive outlook in downstream polypropylene values and a rise in buying interest. However, short supply created a hurdle for sellers to quote definite offers in tune with healthy buying intentions. STYRENE MONOMER Styrene Monomer prices stagnated at US$1360/MT in Asia in the week of December 10, 2007. Not much movement was seen in the market, with sellers managing to sustain prices despite a slight dip in buying intentions. Feedstock benzene prices persisted in its downslide, plunging below US$1000/ MT FOB Korea, on weak demand from buyers. POLYMERS HDPE Persistently robust demand has triggered a hike in suppliers' offers, causing HDPE prices to rise to US$1535/MT in Asia in the week of December 10, 2007. Offers for January/early February shipment from various Asian suppliers have witnessed a price hike surpassing US$1550/MT CFR China. LDPE LDPE prices have risen to US$1665/MT in Asia this week. Persistently limited supplies have led LDPE markets to remain strong in Asia in the week of December 10, 2007. Markets are anticipated to remain strong, with price for January expected to increase by twenty dollars. LLDPE LLDPE prices surged to US$1520/MT in Asia in the week of December 10, 2007 on support from strong HDPE prices as well as growing market demand. Offers for January shipment have been heard higher by at least twenty dollars, with offers for Middle East cargoes rising up to US$1520/MT CFR China. PP Polypropylene prices in Asia rose to US$1440/MT in the week of December 10, 2007. Asian PP prices continue on their northward march on limited supplies caused by restricted influx of deep-sea cargoes from USA. With deals for December recently concluded up to US$1420/MT CFR levels, offers from SE Asian and Indian suppliers have risen by almost twenty dollars. Interestingly, intentions by a Taiwanese seller have been hiked to US$1450/MT CFR China. Deals for PP yarn grade were heard concluded above US$1480/MT CFR Pakistan, pushing up fresh offers by almost twenty to thirty dollars. PVC Prices for PVC moved up to US$975/MT in Asia in the week of December 10, 2007. The market has seen limited activity this week, and the price hike was mainly on account of deals concluded for some Japanese cargoes with end of December shipment terms. Markets in Asia remained lackluster as major suppliers have not yet opened notional January offers. Market players anticipate prices to spike up to almost thousand dollars CFR China levels, as Chinese demand increases ahead of the forthcoming Lunar New Year holiday. GPPS GPPS prices dipped to US$1455/MT in Asia in the week of December 10, 2007, on restrained buying interest from China. A drop in feedstock Styrene Monomer prices has mainly been the cause for the lackluster GPPS market. Bearish trend in the SM markets has kept GPPS markets quiet, as buyers prefer to wait and watch. General buying intention has been pegged lower than sellers' offers. ABS ABS markets stagnated at last weeks' US$1760/MT in Asia in the week of December 10, 2007. Market sentiments did not pick up as demand from China weakened due to tight credit control by the Chinese government. Despite weak demand, average offers have not been lowered, as sellers battle another gain in prices of feedstock butadiene.