Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of November 5, 2007

SUMMARY Crude oil futures for November delivery spiked past US$95 a barrel on the New York Mercantile Exchange. Naphtha prices continue rising in line with robust crude prices. EDC and VCM prices stagnated due to sluggish downstream market movement. Ethylene and propylene prices have dipped as buying interest softens in anticipation of increased supplies from the Middle East. Styrene Monomer prices have dipped as major players remained absent from the markets. HDPE, LDPE, LLDPE prices rose on improved market conditions. GPPS, ABS rose in line with strong crude and naphtha prices. PVC prices stagnated due to persistent dull market outlook and weak demand from China. CRUDE OIL Crude oil futures have spiked past US$95, to settle at a record US$95.93 a barrel on the New York Mercantile Exchange - reaching all time inflation adjusted highs. Several factors have affected the four dollar hike of this week: An unexpected drop in US inventory levels to a two-year low, a dipping dollar that has made OPEC members cautious of increasing output, speculation of an increase in fuel demand, after a government report showed US employers added almost twice as many jobs as forecast in October, a cut in operations at a 172,000 bpd Petroplus Holdings AG refinery in England for a month, reduced rates at Chevron Corp.'s 330,000 bpd refinery in Pascagoula, Mississippi until early next year due to an August fire. NAPHTHA Naphtha prices spiked to US$810/MT in Asia in the week of November 5, 2007. Naphtha prices rose in line with rising crude oil prices that have peaked to an all time inflation adjusted high as well as in line with rising market demand. FEEDSTOCK VCM VCM prices have stagnated at US$780/MT in Asia in the week of November 5, 2007, due to slow moving demand from China. Slow movement in downstream PVC markets has prompted lackluster VCM demand, despite early issue of November offer by Japan's Tosoh. Chinese processors were unwilling to negotiate prices as domestic PVC prices continue to be southbound. VCM prices are expected to dip further in the weeks of November, mirroring the bearish sentiments prevalent in the PVC market. EDC EDC markets were lackluster on weak downstream demand, stagnating at US$415/MT in Asia in the week of November 5, 2007. Weaker prices and dull market sentiments in downstream VCM and PVC markets are reflected in the EDC price stagnancy. However, rising oil and naphtha prices have rendered unfeasible a downward price adjustment by EDC makers. This has led to a twenty dollar price difference between selling bids and buying intention. ETHYLENE Prices of ethylene have stagnated at US$1085/MT in Asia in the week of November 5, 2007. Reluctance on part of the sellers to sell at this low price due to gaining strength of downstream PE and MEG prices has sustained market activity at a very low level. Expectation of a dip in ethylene prices due to an expected increase in supplies from the Middle East has softened buying interest. Thus, despite rising crude oil and naphtha values, ethylene prices have stagnated at last weeks' levels. PROPYLENE Propylene markets were lackluster as prices stagnated at US$1080/MT in Asia in the week of November 5, 2007. Markets witnessed restricted activities as sellers were unwilling to sell at such low prices. Despite runaway crude and naphtha prices, buyers' bids continue to be pegged atleast ten dollars lower, on expectation of increased supplies. STYRENE MONOMER Styrene Monomer prices dipped to US$1360/MT in Asia in the week of November 5, 2007. Absence of players from the markets has led to a low level of activity in the markets. Very few deals were concluded at price level of US$1,350-1,360/mt FOB Korea for December delivery. A five dollar dip was recorded in upstream benzene prices for December delivery. January shipment values are projected to be higher than December values, on the expectation of ongoing strong crude oil market. POLYMERS HDPE HDPE markets were buoyant, causing prices to spike to US$1440/MT in Asia in the week of November 5, 2007. Promising demand from buyers in China has kept markets for yarn and film grades robust last week. Markets could witness further prices hikes if demand from China continues to gain in strength. LDPE LDPE prices have risen to US$1595/MT in Asia in the week of November 5, 2007. Restricted supplies from Asian producers has boosted price and led to an increase in fresh offers from the Middle East as well as South Korea. LLDPE LLDPE prices rose to US$1405/MT in Asia in the week of November 5, 2007, on rising offers from major suppliers. A hike in November offers is expected to continue, as more offers are being heard at US$1,400/MT CFR China level. PP PP prices have risen to US$1370/MT in Asia in the week of November 5, 2007 on a ten dollar hike by major suppliers. Rising feedstock costs are exerting pressures on producers, leading to reduced supplies and rising prices. PP market sentiments have strengthened marginally on account of reduced supply from Asian producers as well as delay in arrival of deep sea cargoes till end of December. PP supplies are estimated to remain firm, leading to higher prices till the end of December. PVC Market for PVC remained lackluster as prices stagnated at US$965/MT in Asia in the week of November 5, 2007. Major suppliers have closed deals for November, leading to the subdued market conditions. Slack demand from China as well as non Asian countries, and the possible influx of deep-sea cargoes from USA have contributed to the bearish sentiments in Asian PVC markets. These downbeat market sentiments are estimated to prompt a further dip in prices in the coming months, notwithstanding rising oil and naphtha prices. GPPS GPPS prices saw a marginal upward movement as prices rose to US$1480/MT in Asia in the week of November 5, 2007, in line with strong crude and naphtha prices. Few transactions were concluded as sellers bids of raising prices by over ten dollars was met with lukewarm response from the buyers, who preferred to defer buying as they adopt a wait and watch policy. ABS ABS prices rose to US$1755/MT in Asia in the week of November 5, 2007, on the back of rising butadiene prices. Suppliers have hiked offers for the month under mounting cost pressures. ABS prices are not expected to dip in the coming few weeks of November.