Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of Sep 17, 2007

SUMMARY Crude oil futures escalated past US$80 per barrel as fast-forming Hurricane Humberto stunned the area around the Texas-Louisiana border and rendered shut down of three refineries. Naphtha rose in line with robust crude prices. EDC and VCM prices dropped due to bearish downstream demand. Ethylene prices dropped on account of weaker demand from downstream PE manufacturers. Propylene prices dropped on quiet market conditions. Styrene monomer (SM) prices rose in line with rising oil and benzene prices. HDPE, LDPE, LLDPE and PVC markets stagnated on dull buying interest. Subdued demand from China has pressurized PP as well as GPPS prices to drop. ABS prices climbed along with rising feedstock prices. CRUDE OIL Crude oil prices escalated past US$80 per barrel, but ended the week of September 17, 2007 at US$79.10 a barrel on the New York Mercantile Exchange. Fast-forming Hurricane Humberto stunned the area around the Texas-Louisiana border, shutting down three refineries -Total Petrochemicals USA, Valero Energy Corp. and Motiva Enterprises LLC refineries in Port Arthur were shut down by power outages. NAPHTHA Naphtha prices rose by almost twenty dollars, past US$700/mt in Asia in the week of September 17, 2007, in line with escalating oil prices. Open-spec naphtha prices for H1-November delivery ended the week at US$705/mt. POLYMER FEEDSTOCK EDC EDC prices saw a drop to US$470/MT in Asia in the week of September 17, 2007. No movement was seen in the market as both buyers and sellers preferred to wait and watch. It seems that the buyers will prevail in the situation of "who will relent first" as sellers' intention to peg prices at last weeks levels are predicted to be hampered by bearish demand from downstream VCM producers in Asia due to the several scheduled plant outages for the maintenance turnaround. Falling feedstock ethylene rates also continue to maintain pressure as EDC prices head southwards. VCM VCM prices dipped by ten dollars to US$850/MT in Asia in the week of September 17, 2007 due to weak demand from China. Softer sentiments prevailed in the market due to strong opposition to price change from Chinese PVC producers. South Korean Hanwha Chemical plans to shut down its 230,000 tpa VCM plant in Yeosu at the end of October for a 20 day turnaround. ETHYLENE Ethylene prices dipped to US$1210/MT in Asia in the week of September 17, 2007. Prices in Asia dipped by almost thirty dollars on account of weaker demand from downstream PE manufacturers. PE demand remained lackluster on the eve of scheduled maintenance shutdown over the months of September and October. Market players are anticipating a continuous increase of ethylene supply- as Formosa's 700,000 tpa no.1 cracker restarts next week. PROPYLENE Propylene prices dipped by twenty dollars to US$1090/MT in Asia in the week of September 17, 2007, as the market remained subdued. Quiet market conditions prevailed as a small number of deals was done due to little buying interest and low inventories that led to inadequate offers from the suppliers of South Korea. Restrained end-user demand prevailed as PP prices continued to be under downward pressure as well as on account of plant maintenance shutdown by few ACN producers. STYRENE MONOMER Runaway oil prices and restricted supply kept Styrene Monomer prices high at US$1410/MT in Asia in the week of September 17, 2007. Price of feedstock benzene in Asia also firmed up on the back of strong crude oil market. POLYMERS HDPE The market for High Density Polyethylene (HDPE) was lackluster in Asia in the week of September 17, 2007. HDPE prices stagnated at last weeks price level of US$1410/MT on account of limited deals. Suppliers did try to raise prices by offering material atleast twenty dollars higher, but lack of buying interest resulted in no deals at this price. Most buyers from China preferred to "wait and watch" in anticipation of a price amendment. LDPE Low Density Polyethylene (LDPE) markets remained lifeless as prices stagnated at last weeks' level of US$1560/MT in Asia in the week of September 17, 2007. An attempt made by the Middle Eastern suppliers to raise prices for offers in China was thwarted by lower offers by the Asian counterparts. Suppliers managed to get better price realization for cargoes in the South East Asian markets than from China. LLDPE Linear Low Density Polyethylene (LLDPE) prices remained unchanged in Asia in the week of September 17, 2007 from last weeks price of US$1400/MT. Suppliers did attempt to raise prices, but were forced to withdraw prices due to very few transactions. Price realization for fresh deals was heard at lower rates in China as well as in SE Asian market. PP Subdued demand from China on account of the oncoming national holidays in October has pressurized Polypropylene (PP) prices to drop by ten dollars to US$1380/MT in Asia in the week of September 17, 2007. As suppliers reduced their offers due to poor buying in China, Asian PP market sentiments mellowed down in the week under the strain of subdued demand from China. PVC Polyvinyl Chloride (PVC) prices stagnated at last weeks' level of US$1040/MT in Asia in the week of September 17, 2007. Though offers for October continue at the same level as this month, market sentiments backed by bullish global demand, anticipate October PVC prices to settle ten-twenty dollars higher than September prices. GPPS GPPS prices saw a marginal movement and slipped to US$1475/MT in Asia in the week of September 17, 2007. Movement was limited on quiet demand from Chinese buyers, as they preferred to remain in the sideline. Very few transactions have been seen in the downstream sectors in Asia, due to unwillingness on part of the Chinese buyers to replenish any inventories at higher price. Simultaneously, lean production margins, on account of rising feedstock SM prices, have kept selling offers for GPPS grade pegged higher by 10-20 dollars. ABS ABS markets gained strength by 5-10 dollars as prices inched up to US$1715/MT in Asia in the week of September 17, 2007. Asian market sentiments firmed up in line with rising feedstock ACN and butadiene costs that exerted production cost pressures.