Price trends of oil, polymer feedstocks and commodity polymers for the week of 19th March 2007

SUMMARY A decision by OPEC countries to maintain oil production and supplies has resulted in a significant decline in oil prices to US$57/barrel. This resulted in downtrend in prices of most polymer feedstocks and commodity polymers. Among the feedstock materials, only propylene, due to tighter supplies and PVC from the commodity polymers, hardened due to good demand in Asia. The next two weeks of March could see continuation of softer prices of most of the feedstocks and commodity polymers caused by decline in oil price. OIL Oil further declined to US$57/barrel in the week of 19th March 2007, because OPEC countries decided to maintain the supply of oil. The price declined almost 10% compared to year ago levels. This decline will provide relief to all petrochemical products and thus provide an impetus to their growth. It is expected that oil would remain soft in the remaining weeks of March 2007. NAPHTHA Naphtha declined significantly after recording prices increases over three consecutive weeks. It declined to US$622/MT in the week of 19th March 2007, despite tight supply from the Indian subcontinent. The main reason of sharp decline was tumbling of oil prices. It is likely to remain around US$620/MT in the remaining weeks of March 2007. POLYMER FEEDSTOCKS ETHYLENE Ethylene price declined marginally to US$950/MT in the week of 19th March 2007, due to abundant supply from the Indian subcontinent and weaker demand. It is likely to remain soft at about US$925-950/MT in the remaining weeks of March 2007. PROPYLENE The price of propylene saw another increase to US$1110/MT in the week of 19th March 2007. This was caused by tight supplies and increased demand throughout Asia. The price could remain higher at around US$1150/MT in the remaining weeks of March 2007. EDC EDC declined marginally to US$410/MT in 19th March 2007 week despite stronger activity of its major derivative PVC. It is understood that some VCM producers have decreased operating rates at their plants. Oil price could decide the price of EDC in the remaining weeks of March 2007. In view of softening of oil, it is quite likely that EDC prices may face higher price pressure. On the other hand, PVC demand being buoyant, could provide some support to higher price of EDC. It is likely that the price of EDC either would remain around US$400/MT or slightly increase in the remaining weeks of March 2007. VCM VCM price remained unaltered at US$690/MT in the week of 19th March 2007. Chinese market of PVC is swinging between higher demand and lack of it. However, all across the other regions of Asia, PVC activity continued to be good leading to maintain the same price despite decrease in EDC price. It is likely to remain around US$700/MT in the remaining weeks of March 2007. STYRENE Styrene declined to US$1245/MT in the week of 19th March 2007, mainly due to decline in ethylene price. However, it could go up marginally. In fact, most of the suppliers have intention of offering styrene at US$1260/MT. Oil price would determine whether suppliers will be able to get a better price. Most likely the price of styrene would remain around US$1250/MT in the remaining weeks of March 2007, and not higher than US$1260-1270/MT. POLYMERS LDPE LDPE remained stable or flat at US$1320/MT in the week of 19th March 2007. Further decline in oil and ethylene price could impact the price but most likely the price would remain around US$1300/MT in the remaining weeks of March 2007. LLDPE LLDPE price remained flat at US$1300/MT in the week of 19th March 2007. The remaining weeks of March 2007 could see little change in the price of LLDPE. The price could hover around US$1290-1300/MT. HDPE HDPE remained slightly softer at US$1285/MT in the week of 19th March 2007 due to weaker demand from China. It is expected that further decline is quite possible to the level of US$1270/MT in the remaining weeks of March 2007. PP Chinese buying was low leading to weaker PP price to the level of US$1265/MT. Further decline is quite possible. It is expected that the price could stabilize around US$1250/MT in the remaining weeks of March 2007. PVC PVC demand bounced back resulting in an increase in price of PVC to US$870/MT. Formosa has increased the price of PVC for April 2007 supplies to US$890/MT. It is quite likely that PVC price could remain around US$880-900/MT. PS Reluctance from Chinese customers of purchasing GPPS at higher price compelled the suppliers to reduce the price to US$1390/MT in the week of 19th March 2007. The decline in oil price could further influence the price to decline further. Most likely the price could reach US$1375/MT by the end of March 2007. ABS The dull market conditions along with sufficient inventory build up in China compelled to reduce the price of ABS to US$1590/MT in the week of 19th March 2007. Further erosion in price is likely in the coming two weeks of March 2007. It is expected that ABS could remain around US$1575/MT.