Price trends of oil, polymer feedstocks & commodity polymers for the week of 23rd July 2007 in Asia

SUMMARY Reports of declining U.S. fuel stockpiles coupled with an increase in gasoline demand has caused oil prices to surge above US$75. Naphtha did not move in tandem with strong crude prices. Ethylene and propylene increased on account of limited supply coupled with robust markets. Styrene Monomer saw a marginal dip. EDC market remained stagnant, while VCM dipped. Market for LLDPE remained stagnant, while HDPE and LDPE rose. PP market witnessed some upward movement. PVC, GPPS and ABS prices stagnated at last weeks levels. CRUDE OIL Crude oil prices spiked above US$75 in the week of 23rd July 2007. The rise in oil prices for August delivery to US$75.57 a barrel on the New York Mercantile Exchange can be attributed to declining U.S. fuel stockpiles as per a weekly report coupled with an increase in gasoline demand. NAPHTHA Stronger crude oil prices could not sustain the price of naphtha in Asia. August shipment naphtha fell to US$705/MT in the week of 23rd July 2007. POLYMER FEEDSTOCKS ETHYLENE Limited supply coupled with a continuing spurt in demand has led to a robust market for ethylene in the week of 23rd July 2007. Ethylene raced ahead to US$1150-60/MT in Asia. Diminishing stockpiles with producers and robust market will ensure a further price surge in ethylene for the month of August 2007. PROPYLENE Limited supply coupled with a continuing spurt in demand has led to a robust market for olefins in the week of 23rd July 2007. Propylene prices rose to US$1070/MT. A tussle between lower buyers' bids and rising selling intention is expected to keep propylene prices high for the next couple of weeks. STYRENE MONOMER (SM) Upstream benzene prices dropped by almost thirty dollars in the week, causing a dip in styrene monomer prices. SM prices dipped marginally to US$1395/MT in the week of 23rd July 2007. The market is currently witnessing a bid by the sellers to maintain offers in contrast to lower buying sentiments. Prices are expected to maintain at this level or rise marginally for the month of August 2007. VCM Despite an unprecedented healthy price realization in downstream PVC, VCM prices were sluggish and dipped to US$810/MT in the week of 23rd July 2007. Market for VCM is anticipated to pick up in August 2007, when PVC market is estimated to rise. EDC EDC market maintained firm sentiments in Asia in the week of 23rd July 2007, accompanied by a continuous rise in upstream ethylene market. Prices remained stagnant at US$440/MT in the week. EDC supply remained tight as high electricity costs have prompted producers in Asia to trim run rates by 10-20%. POLYMERS HDPE Better price realisation from the regions of Europe and Africa has led Middle Eastern and Asian producers to divert cargoes. This has led to a restricted supply in the Asian region, making HDPE prices rise to US$1395-1400/MT level in the week of 23rd July 2007. HDPE prices are expected to rise by almost US$20-30/MT in the month of August 2007. LDPE As buyers preferred to wait and watch, inactivity reigned in the LDPE market in the week of 23rd July 2007. However, prices for the week did see an upward movement to US$1475/MT on the back of tight supply coupled with relatively high EVA prices. In fact, prices are expected to rise by US$30-40/MT in the month of August 2007. LLDPE LLDPE remained a laggard and stagnated at last week's price of US$1380/MT in the week of 23rd July 2007. Some activity is expected to pick up in the LLDPE market, pushing up prices in the August 2007. PP Tight supply has led to firm market sentiments for PP in Asia in this week. Prices moved up to US$1380/MT levels in the week of 23rd July 2007. PP prices are estimated to climb by almost US$20-30/MT for August 2007 on the back of tight supply. PVC PVC prices remained stable for the week of 23rd July 2007 at US$990-100/MT. Despite low realization of prices in China, PVC did not dip on account of robust demand from Middle East and Africa. Market for PVC is expected to pick up in August 2007. GPPS Uncertainty in the upstream Styrene Monomer market has kept most players in downstream Polystyrene markets at bay. GPPS prices maintained at last weeks' level of US$1490/MT due to lack of concluded deals in the week of 23rd July 2007 . ABS The week of 23rd July 2007 saw ABS prices stabilize at last weeks' price of US$1680/MT as buyers adopted a wait and watch. This sluggishness can be attributed to high feedstock prices coupled with tighter supply situation. ABS prices were little changed last week in the Asian market as buyers preferred to take a wait and see stance. A difference of almost forty dollars arose between sellers' price indication and buyers bids.