Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of January 7, 2008

SUMMARY Crude oil prices continue to move up, spiking to hundred dollars mid week. Naphtha prices rose in line with rising crude values. EDC prices moved up on robust downstream VCM and PVC markets. VCM prices stagnated for the week, with a buoyant outlook for the next few weeks. Ethylene and propylene moved up on account of a tight supply situation. Styrene Monomer prices rose in line with rising crude and feedstock prices. HDPE and LDPE rose on strong demand from China, LLDPE stagnated on account of slow moving markets. PP prices stagnated on slow moving demand from China, PVC stagnated on lack of firm offers. GPPS and ABS dipped on lack of buying interest. CRUDE OIL Crude oil future spiked to US$100 per barrel mid week, before slipping to US$97.9 per barrel for February delivery on the New York Mercantile Exchange. Crude oil continues to rise on supply concerns in the first week of January 2008. The US$100 mark was breached midweek mainly as a result of violence in OPEC countries Nigeria and Algeria, a weak dollar, a sudden bout of cold weather. NAPHTHA Naphtha prices in Asia have spiked to US$885/MT levels, in line with rising crude values in the week of January 7, 2008. Open-spec naphtha values for H1-Feb delivery spiked by more than 15 dollars from last weeks level to US$885/MT CNF Japan. POLYMER FEEDSTOCKS EDC EDC prices moved up to US$410/MT in Asia in the week of January 7, 2008 on robust downstream demand. Sellers continue to have an optimistic outlook, driven by robust downstream VCM and PVC markets coupled with rising feedstock ethylene costs. Buying intentions have been sensed at least twenty dollars higher than current sellers offers. VCM Despite robust downstream sentiments, VCM prices stagnated at US$760/MT in Asia in the week of January 7, 2008. However, VCM prices are expected to strengthen by about twenty five dollars in the next few weeks of January on account of an optimistic outlook propped by strong oil and feedstock ethylene and EDC prices, as well as robust downstream PVC prices. ETHYLENE Ethylene prices in Asia peaked to new highs, settling at US$1310/MT in the week of January 7, 2008. Spot prices have seen robust gains, rising on a combination of strong crude values on one hand and consistently firm demand on the other. South Korean suppliers have sustained selling offers above US$1,300/MT FOB Korea levels, as supply situation remains tight on account of an unplanned outage at Mitsubishi Chemical's 450,000 tpa No.2 cracker. On account of the supply paucity caused by this outage, ethylene cargoes from South Korea for January arrival, have been diverted to Japan. Similar volumes for Japan for February are expected to yield a pressure on prices. Interestingly, buying intentions from Taiwan remained bearish in anticipation of an ethylene supply glut from Iran's recently started 1 mln tpa Olefin-9 in Assaluyeh, currently running at 50% capacity. PROPYLENE Propylene prices have risen to US$1220/MT in Asia in the week of January 7, 2008, mainly driven by restricted availability due to the outage at Mitsubishi Chemical's No. 2 naphtha cracker with 260,000 tpa propylene capacity. This will keep prices on the rise until February. FOB Korea offers have risen to US$1230/MT levels on tight supply situation. In the SE Asian region, CFR prices spiked on strong demand from end-users. Prices will continue to be north bound in the next few weeks of January, probably until February. STYRENE MONOMER Styrene Monomer prices have spiked to US$1330/MT in line with rising crude oil and benzene prices. Upstream benzene in Asia for February witnessed a price spurt to US$1025/MT FOB Korea. In fact, styrene prices for March delivery were heard past US$1330. An outage Sinopec Group Maoming Petrochemical's SM plant, along with restricted supplies on account of plant trouble at China National Offshore Oil Co and Shell Petrochemicals Company Limited (CSPC) plant have pressured prices. POLYMERS HDPE Healthy stable Chinese market conditions have pushed up HDPE prices in Asia to US$1610/MT in the week of January 7, 2008. Steady demand from China helped offers rise by ten dollars CFR China for quotes from South Korea, Taiwan, Saudi Arabian producers for January shipment for film as well as yarn grade. LDPE Low level of activities in LDPE market led to fewer deals being transacted, leading to flat prices in Asia in the week of January 7, 2008. LDPE prices stagnated at US$1665/MT as evident from offers for January shipment quoted by SE Asian suppliers. South Korean producers have refrained from quoting firm offers. A shutdown at Malaysian LDPE plant for the past few weeks due to mechanical problems has affected the market activity. LLDPE LLDPE prices rose to US$1580/MT in Asia in the week of January 7, 2008, on strong Chinese demand. Majority of offers from producers from South Korea, Taiwan and Middle East were quoted at higher levels. PP Lackluster demand from China has kept polypropylene prices in Asia flat at US$1460/MT in the week of January 7, 2008. Limited supplies in the region have led some sellers to defer offers upon conclusion of deals at US$1460/MT levels for January shipment. The market for polypropylene is expected to pick up in the next few weeks, and prices are estimated to remain on the higher side on account of restricted supplies on one hand and on the other hand due to optimistic upstream propylene prices projected for the next few weeks. PVC Absence of definitive offers has led to low level of activity in the Asian PVC market, keeping prices stagnant at US$1000/MT. Deals in the region from Asian producers were heard concluded last weeks levels. Robust market conditions for feedstock ethylene and VCM will keep PVC prices on the rise for the next few weeks of January 2008. GPPS Restrained buyer demand has kept GPPS prices at a lower level of US$1410/MT in Asia in the week of January 7, 2008. The market lacked movement as most players continued to be away on account of the New Year. Buying intentions were almost thirty dollars lower than current sellers' offers. GPPS prices are expected to have an unoptimistic/pessimistic outlook on uncertainty of improving demand from China on the eve of the Chinese Lunar New Year Holiday. ABS ABS prices slipped down to US$1745/MT in Asia in the week of January 7, 2008, on lack of buying interest. Sellers did attempt to maintain prices at last weeks' levels, but a ten dollar drop was witnessed despite a rise in feedstock butadiene prices. Sellers' offers remained under pressure as buyers refrained from buying due a break in seasonal demand and unwillingness on part of Chinese buyers to stockpile despite the approaching Chinese Lunar New Year Holiday.