Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of November 26, 2007

SUMMARY Crude oil prices have risen to near US$98 a barrel as the weather gets colder in the United States and Europe, and the US dollar continues to weaken. Naphtha prices spiked by thirty dollars- in line with robust crude prices. VCM prices dipped in line with diminishing downstream PVC demand, while EDC prices dipped on bearish market sentiments. Ethylene markets stagnated as an influx of cargo from the Middle East has led to a situation of abundant supply. Propylene prices stagnated as buyers and sellers refrained from activity due to bullish downstream PP markets. Styrene Monomer prices dipped on bearish upstream benzene markets. Propped by strong demand from China, HDPE prices continued to rise and LLDPE rose in line with optimistic HDPE market. LDPE and PP markets have gained strength on the back of limited availability. PVC prices stagnated on the lack of movement in the market. Restrained demand from GPPS buyers have pressured downward market movement in Asia while ABS markets stagnated as buyers preferred to wait and watch. CRUDE OIL Crude oil prices have risen to near US$98 a barrel as the weather gets colder in the United States and Europe, and the US dollar continues to weaken. The dollar hit a new low against the Euro on Friday as speculation continued that the American credit crisis will lead to another cut in US interest rates. The onset of the Northern Hemisphere winter will boost fuel demand and continue to exert pressure on oil prices. Crude oil futures jumped up last week and closed at all time high of US$98.18 per barrel in the New York Mercantile Exchange, midmorning in Singapore. NAPHTHA Naphtha prices in Asia had a robust gain of almost thirty dollars, as they spiked to levels above US$860/MT CNF Japan in the week of November 26, 2007. This spurt in prices is in line with rising crude oil prices. FEEDSTOCK VCM Opposition from downstream Chinese buyers has caused VCM prices to slip further in Asia to US$750/MT in the week of November 26, 2007. VCM producers from Japan were forced to down-adjust November offers to US$740/MT CFR Japan indicating sluggish Chinese PVC market. In the tussle that ensued between buying interest and sellers' bids, the Chinese PVC makers finally accepted the price of US$750-760/MT CFR China. EDC EDC prices in Asia dipped to US$410/MT in Asia in the week of November 26, 2007 on bearish market sentiments. The subdued EDC market sentiments were caused by an influx of cheap deep-sea cargoes as well as restrained demand from vinyl producers. Buying bids that have dipped even lower have caused Taiwan's Formosa to suspend December EDC offers. ETHYLENE Ethylene prices stagnated at US$1190/MT in Asia in the week of November 26, 2007 despite a short supply situation caused by an unplanned outage declared at Samsung Total's naphtha cracker. An incessant influx of cargo from the Middle East, causing a supply glut, has been mainly responsible for the stagnancy in the market. SamsungTotal's 850,000 tpa naphtha-cracking unit is estimated to remain closed for over a week due to compressor problem. The outage has, however, has had limited influence over the ethylene market of Northeast Asia, as the company had already lowered the run rates at its cracker and reduced exports. PROPYLENE Propylene prices sustained at last weeks' levels of US$1100/MT in Asia in the week of November 26, 2007. The markets remained lackluster as buyers and sellers refrained from activity due to bullish downstream PP prices. An unexpected shutdown of SamsungTotal's naphtha cracker had limited effect on Asian propylene prices; as Samsung Total also closed its downstream PP plant, restricting demand. STYRENE MONOMER Styrene Monomer prices dipped to US$1380/MT in Asia in the week of November 26, 2007, induced by bearish upstream benzene market. Some deals were heard concluded at US$1370/MT FOB Korea. Benzene prices dipped to US$1025/MT in Asia despite bullish crude oil and naphtha values, as buyers adopted a wait and watch policy. POLYMERS HDPE Robust market demand has triggered a rise in HDPE prices to US$1490/MT in Asia in the week of November 26, 2007. Deals for film grade for December shipment were heard concluded between US$1480-1500/MT and deals for yarn grade were accomplished US$1470-1480/MT CFR China. LDPE LDPE markets remained firm in Asia on the back of persistently restricted supplies at US$1630/MT in the week of November 26, 2007. A gap of almost thirty dollars exists between suppliers' offers and buying intentions. Limited availability has triggered a rise in fresh offers by suppliers for SE Asian LDPE cargoes to US$1630/MT CFR China against buyers' bids of US$1600/MT CFR China. LLDPE LLDPE prices rose to US$1480/MT in Asia in the week of November 26, in line with optimistic HDPE market, as well as persistently tight supplies PP Polypropylene prices spiked to US$1420/MT in Asia in the week of November 26, 2007 on the back of limited availabilities in the region. Offers from Indian producers as well as South East Asian suppliers were heard upto US$1430/MT CFR China for yarn and injection grade and at US$1450/MT CFR China for IPP grade. Prices are anticipated to rise in the weeks of December 2007 as most sellers have held onto firm offers in anticipation of further hike in prices. PVC PVC markets were lackluster and stagnated at US$955/MT in Asia in the week of November 26, 2007, on lack of movement in the market. Interestingly, buying interest from China this week was perceived better than the previous few weeks as buyers began restocking. Japanese suppliers continue to offer material at higher values than Taiwanese major despite low bids from China. Chinese buyers continue seeking a further down-adjustment in prices in line with Formosa's offers despite a downward revision of prices. PVC prices are anticipated to bottom out in November, after which they will head north, on expected revival of demand from China, as buyers build up their inventories from December prior to starting long Lunar new year holiday. Demand from non Asian countries also improved this month. PS Restrained demand from buyers pressured downward market movement in Asia, as prices dipped to US$1470/MT in Asia in the week of November 26, 2007. Buyers preferred to wait and watch in anticipation of downward adjustment of market prices despite rising upstream naphtha and SM values. Very few deals were concluded as the gap between suppliers' prices and buying intentions widened. ABS Market for ABS remained lackluster and stagnated at US$1770/MT in Asia in the week of November 26, 2007 as buyers preferred to wait and watch. This stagnancy in the market was despite low levels of buying from China, and unrelenting supplier offers on the back of rising costs of feedstock butadiene and ACN. Buyers want to benefit from a cut in import tariffs from 1 January, 2008, hence they are deferring purchases until the New Year.