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

SUMMARY Oil declined to US$60/barrel due to reduced demand from USA on account of warm weather returning to USA. Further decline is quite possible. A meeting of OPEC countries and their decision thereafter will decide the price of oil. Naphtha continued its march northwards due to continued demand rise in its derivatives. Propylene and VCM hardened but the remaining polymer feedstocks declined. All commodity polymers with the exception of PVC surged ahead. PVC remained stagnant. The next two weeks of March could see decline in oil, leading to possible decline in the feedstocks as well as commodity polymers. Only PS and ABS are expected to remain stronger due to demand. OIL Oil declined to US$60/barrel in the week of 12th March 2007, mainly due to onset of warm weather in USA putting less pressure on demand of oil. The OPEC meeting would decide the future price of oil. It is expected that price could fluctuate around US$58-60/barrel in the remaining weeks of March 2007. The weaker economy in USA could also result in reduction in the price of oil. NAPHTHA Naphtha continued to see sharp increase in this week for the third consecutive week. In the week of 12th March 2007, prices touched US$658-660/MT. It seems that demand of naphtha derivatives continues to increase, putting up a tremendous pressure on naphtha. Naphtha price is expected to remain strong in the next two weeks at about US$660-670/MT. POLYMER FEEDSTOCKS ETHYLENE Ethylene price declined to US$1000/MT in the week of 12th March 2007, due to abundant supply and weaker demand in Taiwan. Japanese suppliers were aggressively liquidating their stocks. It is expected that ethylene will see price increase back to US$1025-1040/MT in the coming two weeks because the supplies will be dried up. PROPYLENE The price of propylene increased to US$1060/MT in the week of 12th March 2007. The supplies from Japan have dried up compelling the price to rise. Propylene is expected to harden up further in view of good demand and may reach US$1100/MT in the coming few weeks. EDC The subdued demand of EDC derivatives caused a marginal decline to US$415/MT in 12th March 2007 week. It is likely to remain soft in the coming few weeks or even could go down to US$400/MT. VCM Tighter supply compelled the price of VCM to rise to US$690/MT in the week of 12th March 2007. Further deals are being quoted at US$700/MT. Perhaps, setting up of a new plant of VCM in China at Tianjin LG Bohai by end of March 2007 could relieve some pressures. VCM could remain around US$680-700/MT in the coming two weeks. STYRENE Styrene practically remained at the same level or marginally lower level of US$1255/MT in the week of 12th March 2007. However this seems to be an aberration since Chinese processors are building up their inventories of PS, the major derivative of styrene monomer. It is likely to harden as the demand keeps up the pressure on requirement of styrene. Most likely to it could go up to US$1270/MT, if not higher. POLYMERS LDPE A decline in oil price could not arrest an increase of LDPE price to US$1320/MT in the week of 12th March 2007 due to tighter supply. While the demand is steady and is likely to grow more due to resumption of work after holiday season in China tighter supply is expected to continue forcing the price to rise further. It is expected that the price could go up to US$1340/MT or even higher. LLDPE Resurgence in demand from China put a pressure on price of LLDPE to reach US$1300/MT in the week of 12th March 2007. Further increase in LLDPE price can not be ruled out. It is likely to be around US$1320/MT in the next two weeks. HDPE After remaining stagnant for several weeks, HDPE finally inched upwards to US$1290/MT in the week of 12th March 2007. It is to be seen whether price will continue to increase or remain range bound around this level in the remaining weeks of March 2007. PP Tighter supply helped PP to rise to US$1275/M. However, the demand is not yet revived. It is expected that price of PP would remain around this level in the remaining weeks of March 2007. PVC PVC, due to dull market in China remained almost stagnant at US$860/MT. In fact the suppliers aggressively exported PVC to India which is in overall deficit. It is quite likely that PVC would remain stable around this level in the remaining two weeks of March 2007. PS Chinese processors are aggressively building up their stocks compelling a surge in the price of GPPS to reach US$1410/MT. GPPS may continue to remain strong in the coming few weeks keeping its price up. It is likely to reach US$1420/MT in the next two weeks. ABS ABS, due to higher demand from China increased sharply to US 1610/MT. Further rise can not be ruled out. It is expected to reach a level of US$1640/MT in the remaining weeks of March 2007.