Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of Sep 24, 2007

SUMMARY Crude oil prices touched new highs and surpassed US$82 a barrel during the week on news of a cut in interest rates by the Federal Reserve to boost the US economy. Naphtha spiked in line with robust crude prices. EDC and VCM prices continued their downward trend due to bearish downstream demand. Ethylene prices dropped on account of weaker demand from downstream PE manufacturers that weighed down increasing supply. Propylene prices dropped on quiet market conditions. Despite a quantum jump in upstream benzene prices, styrene monomer prices dipped by over thirty dollars this week. HDPE, LDPE, LLDPE and PP markets stagnated as damp market conditions continued to prevail. PVC prices dropped as markets remained slightly toned down on dismal demand from China. GPPS and ABS prices climbed along with rising feedstock prices. CRUDE OIL 79.1 81.62 Oil prices closed at US$81.62 a barrel in the week of September 24, 2007 for November contract on the Nymex. During the week, oil prices touched new highs and surpassed US$82 a barrel on news of a cut in interest rates by the Federal Reserve to boost the US economy. The Federal Reserve announced a cut in key interest rate to 4.75%, twice of what most economists expected. Later in the week, prices slipped, but firmed up around record levels as the market was wary of potential looming tropical storm off the west coast of Florida. This resulted in temporary closure of about 25% of the Gulf of Mexico's daily oil production, providing an extra boost to the oil market's already strong run in view of tight crude inventories. However, the actual drive behind the rally is an influx of speculative "nontraditional" capital into energy commodities, an inflow that increases when the dollar falls. NAPHTHA Naphtha prices in Asia spiked by over twenty dollars to US$730/MT in the week of September 24, 2007. Asian naphtha prices bounded higher, in line with a swift increase in crude oil values. POLYMER FEEDSTOCKS EDC Quiet conditions that prevailed in EDC markets kept prices down at US$460/MT in Asia in the week of September 24, 2007. A number of VCM plants in Asia are scheduled for annual maintenance shut down in October, keeping demand from downstream VCM makers down. Sellers continue to quote at last weeks' levels, but feeble demand is keeping bids at a level not higher than US$460/MT. VCM VCM prices softened to US$840/MT in Asia in the week of September 24, 2007, mainly because of weak demand from China. Tough price opposition from the PVC producers of China has kept VCM markets slack this week. Lower price realization from PVC buyers has caused this resistance from the Chinese PVC makers - the buyers in the VCM market. ETHYLENE Ethylene prices dipped to US$1190/MT in Asia this week. Increasing supply weighed down by inadequate demand from end users kept ethylene prices in Asia depressed in the week of September 24, 2007. An abundant supply situation in Japan was mainly due to problems in domestic downstream plants. Demand continues to remain bearish from Taiwan, mainly because of the smooth commencement of operations at 85-90% levels at the 700,000 tpa No.1 cracking unit of Taiwan's Formosa Petrochemical Corporation (FPCC). Competitive offers for cargoes from Taiwan as well as India were heard. PROPYLENE Propylene prices dropped by ten dollars in Asia in the week of September 24, 2007, to US$1080/MT as weak sentiments were witnessed in the propylene market. Despite softer prices for propylene, a very small number of deals were heard done, mainly due to restrained demand from end-users. A tight supply status is anticipated shortly, resulting in further price increases in the coming weeks. STYRENE MONOMER Despite a quantum jump in upstream benzene prices, styrene monomer prices dipped by over thirty dollars this week. SM prices dropped to US$1370/MT in Asia in the week of September 24, 2007. Triggered by rising oil and naphtha prices, benzene prices spiked above US$1000/MT in Asia this week (by almost twenty dollars). POLYMERS HDPE Resistance from buyers in China has kept price of HDPE stagnant in Asia in the week of September 24, 2007. Buyers from Asia, particularly China, prefer to "wait and watch" in anticipation of price revision. This has led to fewer new deals in this week. However, quiet market conditions in Asia have not succeeded in lowering HDPE prices mainly because of strong demand from non-Asian countries. Slow trading of HDPE cargoes toward Latin America caused by rising freight costs as well as decreasing market demand, as also affected the market. LDPE Stability reigned in the LDPE markets in Asia in the week of September 24, 2007. Prices stagnated at US$1560/MT in Asia this week. Awaiting October offers from the producers, buyers prefer to wait and watch in anticipation of downward price revision. A dip in LDPE prices is expected on the back of seasonally slow demand in Asia. LLDPE LLDPE markets remained lackluster as prices stagnated at US$1400/MT in Asia in the week of September 24, 2007. Awaiting October offers from the producers, buyers prefer to wait and watch in anticipation of downward price revision. LLDPE prices are estimated to drop on the back of seasonally slow demand in Asia. PP PP markets remained lifeless in Asia in the week of September 24, 2007. Damp market conditions prevailed, as the market paused for firm offers for October shipment. PVC PVC prices weakened to US$1030/MT in Asia in the week of September 24, 2007. Markets remained slightly toned down on dismal demand from China. Current demand from Middle East countries, Russia and Egypt has dipped more than before due to mounting resistance from buyers. In all possibility, sellers could face higher pressure ahead of upcoming low demand season. Though selling intentions were pegged ten dollars higher than last weeks' prices, most deals were heard done at lower prices. GPPS GPPS prices inched up in Asia in the week of September 24, 2007 to US$1480/MT. Higher prices were trigger ed by robust crude oil and feedstock prices. However, weak buying sentiments from China kept a SM price surge under check despite rising feedstock values. ABS ABS prices moved up to US$1725/MT in Asia in the week of September 24, 2007, in line with another gain of feedstock costs. Ongoing robust feedstock prices have led to regained strength in the Asian markets. Most major producers hiked offers by USD20/MT, concurrent with surging ACN and butadiene prices.