Price trends of oil, polymer feedstocks and commodity polymers for the week of 12th February 2007

SUMMARY Oil increased marginally and reached the psychological mark of US$60/barrel. Delayed onset of a severe winter in North Eastern USA and a very cold snap during the week of 12th February 2007 could increase oil further in the remaining weeks of February 2007. The higher price of oil has increased the price of naphtha sharply. However, it is to be seen whether such steep increase could be maintained or it loses the steam later. Ethylene declined very sharply due to abundant supplies and weaker market conditions. Propylene was rather soft due to weaker demand. Both VCM and styrene monomer increased in price while EDC remained flat. LDPE prices softened, while LLDPE gained marginally. PP prices increased marginally despite any change in the market conditions. All other commodity polymers ruled at the price of 5th February 2007. The remaining weeks of February may be very quiet for commodity polymers despite worry of higher oil price because of rather subdued market conditions. OIL Oil reached almost US$60/barrel in the week of 12th February 2007. Prices could spike due to further heavy snowing and cold and severe winter in USA, increasing requirement of oil for heating. It is expected that the remaining weeks of February will see oil at US$60-62/barrel. NAPHTHA Naphtha rose very sharply to reach almost US$600/MT in the week of 12th February 2007 due to higher cost of oil. It is not certain whether the price would continue to rise but at least it will remain high in the price band of US$550-575/MT in the coming weeks of February 2007. POLYMER FEEDSTOCKS ETHYLENE Ethylene price drastically declined from US$1200/MT in the week of February 5th 2007, to US$1135/MT in the week of 12th February 2007 because of increased supply from Korea and Japan. It is quite possible that the price could taker some more beating because the markets of ethylene derivatives are sluggish. It is likely that it will dip to US$1100/MT in the next few weeks of February 2007. PROPYLENE Propylene was rather soft and marginally lost by US$5/MT from US$1070/MT in the week of February 5th 2007 and reached US$1065/MT in the week of 12th February 2007. For the remaining weeks of February 2007, not much activity is expected in propylene. It is quite possible that propylene will hover around US$1060-1070/MT. EDC EDC continued to remain stagnant due to market conditions. The same price of US$450/MT continued for the second week consecutively in the week of 12th February 2007. EDC is expected to remain soft or stable at this price in the remaining weeks of February 2007. VCM VCM after remaining stagnant rose by US$10/MT to reach US $680/MT in the week of 12th February 2007. Chinese demand is firm. It is therefore expected the price of VCM could increase to US$490/Mt n the coming weeks of February 2007. STYRENE Higher oil price as well as an increase in benzene price made styrene price to go up by US$10/MT from US$1235/MT in the week of February 5th 2007 to US$1245/MT in the week of 12th February 2007. Styrene could continue to remain firm. Price could inch up higher to US$1250/MT before the end of February 2007 only because of higher feedstock costs. POLYMERS LDPE LDPE price declined by US$10/MT from US$1310/MT in the week of February 5th 2007. Some supplies were even traded at US$1290/MT. The market is not likely to be revived in the coming few weeks of February 2007, and expected to stagnate in the rest of February 2007. LLDPE The continued demand of LLDPE from China kept the price firm and marginally higher from US$1285/MT in the week of February 5th 2007 to US$1290/MT in the week of February 12th 2007. It is quite possible that LLDPE will continue to remain firmer in the next few weeks of February 2007. HDPE HDPE remained flat manly due to rather lack luster market conditions. The availability of cheaper deep sea cargoes was also responsible for flat HDPE in the week of 12th February 2007 at US$1285/MT. HDPE may continue to remain stagnant at this level in the remaining weeks of February 2007. PP While the price of propylene as lower the price of pp gained by US$5/MT from US$1260 /MT in the week of February 5th 2007 to US$1265/MT in the week of 12th February 2007. However the immediate future of PP does not look bright since the market demand appears to be subdued. It is quite possible that PP could remain range bound between US$1260-1270/MT in the remaining weeks of February 2007. PVC The coming lunar holidays has kept the market of PVC quiet. The customers are unwilling to build inventory. An increased price of VCM however some worry. It is quite possible that PVC may continue to remain at US$850/MT not only in the week of 12th February 2007 but even in the remaining weeks of February 2007. It could even fall to US$830-80/MT due to lack of demand on account of holidays. PS The lack of demand from China kept the price of GPPS stagnant at US $1380/MT in the week of February 12th 2007. The price is likely to remain flat at this level in the remaining weeks of February 2007. ABS ABS also remained stagnant at 1585/MT in the week of 12th February 2007. The customers are not willing to purchase ABS at higher price. However the suppliers are interested in getting deals at higher price due to increased cost of feedstocks. It is uncertain whether the suppliers would win or the customers. Most likely the price of ABS could remain between US$1580-1600/MT in the remaining weeks of February 2007.