Price trends of oil, polymer feedstocks & commodity polymers for the week of 21st May 2007

SUMMARY Oil has surged higher & reached US $ 65-67/barrel mainly due to lower inventory or decline in the oil inventory in USA & higher demand due to imminent hot weather. Naphtha also gained on account of higher oil price. All commodity polymer feedstocks with the exception of styrene monomer remained static because of relatively calmer market conditions. Only styrene monomer increased due to higher price of oil & naphtha. Higher demand of ABS also was another reason for stronger price of styrene monomer. While the overall demand situation of commodity polymers does not seem to be too bright but HDPE, PVC & ABS gained due to some increase in demand. GPPS increased due to higher price of oil, naphtha & styrene monomer. It is quite likely that the higher price of GPPS cannot sustain for long. For June 2007, oil & naphtha are likely to remain stronger resulting in pressure build up on price of feedstocks as well as commodity polymers. Some of the polymers showing good demand like PVC & ABS as well as HDPE could go up along with higher price of oil & naphtha. OIL Oil again surged higher & reached US $ 65-67/barrel in the week of 21st May 2007. While oil on Brent was US 65/barrel it reached almost US $ 67/barrel on Nymex & WTI. A decline of September 2007 in USA's inventory was one of the reasons while the demand in USA is increasing due to imminent summer that will not provide any respite until the beginning of September 2007. The stoppage of some US refineries is another reason. Oil definitely will remain harder & will remain around US $ 65-70/barrel until end August 2007. NAPHTHA Due to increase of oil price, the price of naphtha increased to US $ 722-725/MT in the week of 21st May 2007.The demand of naphtha also appears to be good. It will remain stronger & will remain around US $ 725-740/MT in the next few weeks until June end 2007. POLYMER FEEDSTOCKS ETHYLENE The dull market condition of ethylene markets has kept the price of ethylene stagnant at US $ 1150/MT in the week of 21st May 2007.It is likely to remain either around US $ 1150/MT or could go up with increase in price of oil to about US $ 1170/MT until the month of June 2007. PROPYLENE Propylene unlike last few weeks where it remained stronger has remained stagnant due to lackluster markets of propylene derivatives. The price remained static at US $ 1100/MT in the week of 21st May 2007. It is expected to remain dull & at around US $ 1100/MT at least until June 2007. EDC EDC was inactive due to dull market conditions & remained stagnant at US $ 390-400/MT in the week of 21st May 2007. It is expected to remain at US $ 400/MT until June 2007. VCM VCM lost its steam & remained static at US $ 720/MT in the week of 21st May 2007. This was due to inactive market conditions. It is likely to move in a narrow range of US $ 710-730/MT in the following few weeks & up to June 2007. STYRENE Styrene gained further & reached US $ 1370/MT in the week of 21st May 2007. An increase in oil price was the main reason. It is likely to remain rather inactive at about US $ 1370-1390/MT in the next few weeks & until June 2007. POLYMERS LDPE A market condition compelled the price of LDPE to stabilize at US $ 1360-1370/MT in the week of 21st May 2007. It is not likely to dramatically change in the next few weeks. No signs are observed for improvement of market conditions. It is expected to trade in a narrow range of US $ 1370-1380/MT in the next few weeks or at least until end June 2007. LLDPE LLDPE also remained static at US $ 1290-1300/MT in the week of 21st May 2007. It is expected to remain around US $ 1300/MT in the rest of May 2007 & possibly even in June 2007 because no apparent resumption of stronger market condition is seen. HDPE HDPE continued to rise marginally due to increased demand from South American region & lack of supplies from USA to this region. As a result the price of HDPE in Asia remained firmer at US $ 1300-1305/MT in the week of 21st May 2007. It is likely to remain firm in the next few weeks at about US $ 1310-1320/MT at least until June 2007. PP PP again has become dull & remained stagnant at US $ 1275/MT in the week of 21st May 2007. It will remain around US $ 1270-1280/MT in the rest of May 2007 & possibly in June 2007. However, the suppliers are interested in realizing the price of US $ 1300/MT in June 2007. PVC The suppliers taking the advantage of stronger market conditions have increased the price of PVC to US $ 950/MT in the week of 21st May 2007. Due to good market conditions PVC will continue to remain strong at US $ 970/MT in the next few weeks leading to June 2007. GPPS Higher price of feedstock & oil increased the price of GPPS to US $ 1440/MT in the week of 21st May 2007. It is not likely to sustain much because of lack luster demand from the Asian market. Only higher price of feedstock could keep the price higher. Most likely GPPS will remain around US $ 1450/MT in the coming few weeks or at least up to the beginning of June 2007. ABS Higher price of styrene monomer was the primary cause of an increase of price of ABS to US $ 1650/MT in the week of 21st May 2007. It is likely to remain firmer in the next few weeks or even up to June 2007 on account of reasonable demand situation in China & higher price of oil & feedstock.