Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of November 12, 2007

SUMMARY Crude oil futures for November delivery spiked past US$96 a barrel on the New York Mercantile Exchange amid concerns about supplies due to OPEC's apparent reluctance to pump more crude into the market and a weak US dollar. Naphtha prices continue rising in line with robust crude prices. VCM prices dipped in line with diminishing downstream demand, while EDC prices stagnated as sellers resist lower bids from buyers. Ethylene prices spiked by a healthy hundred dollars on emerging downstream demand and propylene prices firmed up on strong crude oil and robust naphtha prices. Styrene Monomer prices rose on promising demand from buyers. Riding on the back of robust market sentiments and strong demand HDPE, LDPE, LLDPE and PP prices saw healthy rise. PVC and GPPS markets were lackluster and lacked any movement as prices stagnated. A spurt in feedstock costs has caused ABS prices to rise. CRUDE OIL Crude oil futures rose past US$96 in the week of November 12, 2007 despite a slowing US economy. This rise can be attributed to expectation of possible rise of options trading. Crude oil for December delivery rose to US$96.32 a barrel on the New York Mercantile Exchange, surging amid concerns about supplies due to OPEC's apparent reluctance to pump more crude into the market and a weak US dollar. NAPHTHA Naphtha prices rose to US$830/MT in Asia in the week of November 12, 2007. This spike of almost twenty dollars this week is driven by rising oil prices. VCM VCM markets of Asia were subdued and dipped to US$765/MT on diminishing downstream demand and worsening buying intentions in the week of November 12, 2007. Bearish sentiments prevalent in the markets were a direct impact of low bids from Chinese PVC producers. Despite falling prices, buying sentiments from China were pegged at least thirty dollars lower on weakening prices of downstream PVC. In fact, the continuing sluggish market sentiments could force Japanese VCM producers to consider a cut in production, in a bid to cope with increasing cost pressures, as upstream naphtha prices continue to rise. EDC Markets for EDC remained quiet and stagnated at US$415/MT in Asia in the week of November 12, 2007. Dipping buyers bids continue to exert cost pressures on producers, who are reluctant to sell at such low rates. Offers from the Middle East region were quoted at around US$425/MT CFR Asia. 30,000 tons of US deep-sea cargoes with January arrival terms was heard offered about ten dollars lower at US$415/MT levels toward the contractual buyers in Asia. This anticipated dip in prices to an all time low has kept Formosa away from the markets as the Taiwanese major abstains from exports. ETHYLENE Ethylene prices recorded a hundred dollar jump in Asia in the week of November 12, 2007. Riding on the positive wave of emerging demand from downstream Polyethylene and MEG producers, prices surged to US$1190/MT. Selling bids from South Korea were quoted higher than US$1,200/MT FOB Korea that the Chinese buyers seek. Buying bids in Taiwan were pegged lower, on news of return of output from Formosa's restarted 900,000 tpa no.2 naphtha cracker. PROPYLENE Propylene prices firmed up to US$1090/MT in Asia in the week of November 12, 2007. Strong crude oil and robust naphtha prices led to firming up of propylene market sentiments. STYRENE MONOMER Emerging demand from buyers has led to a healthy spurt in Styrene Monomer prices in Asia in the week of November 12, 2007. Riding on robust demand, SM prices rose last week to US$1385/MT as feedstock benzene prices remained firm at around US$1,060/MT on the back of strong crude oil market. POLYMERS HDPE Strong demand from China has pushed up HDPE prices in Asia in the week of November 12, 2007 to US$1470/MT. HDPE markets gained strength on flourishing demand from Chinese buyers as deals for most cargoes from South Korea, Taiwan as well as India were heard done at high values. HDPE prices are expected to gain further on the back of strong market demand. LDPE LDPE markets gained in strength and rose to US$1610/MT in Asia in the week of November 12, 2007. Most LDPE suppliers, upon conclusion of November deals, have started to open December offers at a price increase of almost thirty dollars. An example is the sharp contrast in offers by LG Chem for December shipment at US$1600-1,630/MT CFR China in comparison to November deals at above US$1550/MT CFR China. The same holds true for offers from Malaysian as well as Middle Eastern suppliers. LLDPE Riding on the back of robust market sentiments, LLDPE markets spiked to US$1470/MT in Asia in the week of November 12, 2007. This price hike is concurrent with rising HDPE prices. Few deals were concluded at US$1460/MT CFR CMP, while a majority of offers from South Korean and Taiwanese suppliers were hiked above US$1490/MT CFR China. PP Polypropylene prices in Asia continued their march northwards as prices topped US$1400/MT in the week of November 12, 2007. PP markets were robust on the back of increasing demand from China. Expectation of a further price hike due to short supplies from US has led to stockpiling among the buyers, further supporting demand. In this tight supply scenario, sellers have already raised future offers by almost twenty dollars. PVC PVC markets were lackluster and lacked any movement as prices stagnated at US$965/MT in Asia in the week of November 12, 2007. The bearish market outlook seems unlikely to gain much momentum as demand from China continues on a quiet note. Demand from China remains restrained due to weak domestic prices. The stagnancy in the market is also supported by the suppliers who have not started to offer cargoes for December shipment, as few of them are considering a price hike in December to counter rising naphtha and feedstock values. PVC prices could, however, bottom out for December shipment, as Chinese buyers conventionally begin to replenish stocks before the advent of the lunar new year holidays. GPPS GPPS prices in Asia stagnated at last weeks' levels of US$1480/MT in the week of November 12, 2007. Lackluster market sentiments abetted the subdued market movements and low key transactions, as many Chinese buyers preferred to keep on the sideline, in the face of subdued downstream demand. A slack in the global IT sector has resulted in subdued demand for final products, rendering processors to run their factories at reduced rates. Buying intentions are being pegged atleast twenty dollars lower than sellers' offers. ABS A spurt in feedstock costs has caused ABS prices to rise to US$1765/MT in Asia in the week of November 12, 2007. Upstream butadiene prices continue to rise, raising mainstream ABS offers for November shipment. Buyers however, are on their guard and prefer to exercise caution in buying fresh cargoes at the increased prices.