Price trends of oil, polymer feedstocks & commodity polymers for the week of 28th May 2007

SUMMARY Oil continues to remain stronger. This week oil increased marginally to US $ 65/barrel due to violence in Nigeria & higher demand potential in USA due to long weekend holidays. Naphtha also continues to remain stronger on account of better market conditions. All feed stocks with the exception of propylene have gained in the prices mostly due to rise in oil & naphtha. Some feedstocks like EDC/VCM as well as styrene monomer also gained due to demand of their down stream products. All commodity polymers with the exception of LLDPE were stronger this week. PVC as well as ABS appears to be quite strong. In PE HDPE on account of global demand increase remained quite buoyant in the week of 28th May 2007. June 2007 prices likely to be strong. OIL Oil due to violence in Nigeria & likely higher use of oil in USA due to long Memorial Day weekend saw a marginal rise. Of course, Brent price surged strongly to US $ 70/barrel in the week of 28th May 2007 from US $ 65/barrel in the week of 21st May 2007. It is likely to remain harder at around US $ 65-70/barrel in the coming weeks & at least up to August due to higher demand on account of summer in USA. NAPHTHA Naphtha continues to rise due to stronger oil price & good demand of its derivatives. For the week of 28th May 2007, naphtha rose to US $ 730/MT. Naphtha is expected to remain around US $ 730-735/MT in June 2007. POLYMER FEEDSTOCKS ETHYLENE Ethylene market scenario remained rather calm but the indications are that ethylene would surge stronger in June & could reach more than $ 1225/MT from the present level of US $ 1160/MT in the week of 28th May 2007. The present price is higher compared to that in the week of 21st May 2007. June 2007 would see a strong ethylene at about US $ 1225-1240/MT. Hardening of oil is one of the reasons but another & possibly major contributory reason is that ethylene derivative market appears to be picking up. PROPYLENE Most of consumers of propylene due to duller market conditions decided to wait & watch. This resulted in the erosion of the price to US $ 1060/MT in the week of 28th May 2007. Propylene unlike ethylene is likely to move in a narrow range of US $ 1050-1070/MT in June 2007. EDC Higher oil & ethylene prices coupled with higher price realization of PVC helped EDC to gain in price by about US $ 10/MT. The price of EDC was US $ 400/MT in the week of 28th May 2007. It is expected to remain stronger at about US $ 400-420/MT in June 2007. VCM VCM continued to rise sharply consecutively for the second week in succession & reached US $ 750/MT in the week of 28th May 2007. It is likely to remain harder at about US $ 760-780/MT or even higher around US $ 800/MT due to good demand of PVC & higher prices of ethylene in June 2007. STYRENE Styrene increased due to good demand in the Asian market & reached US $ 1380/MT in the week of 28th May 2007. It is likely to remain harder at about US $ 1400/MT in June 2007 due to higher feedstock prices as well as good market conditions. POLYMERS LDPE Tighter supplies compelled the price of LDPE to go up marginally due to relatively subdued demand in Asia. It reached about US $ 1380/MT in the week of 28th May 2007. It is likely to move in a narrow range of about US $ 1380-1400/MT in June 2007 due to continued supplies problems. LLDPE LLDPE continued to remain stagnant at US $ 1290-1300/MT in the week of 28th May 2007. It is expected to remain around US $ 1300/MT in June 2007 because market seems to remain quiet & dull. HDPE The stronger global demand continued this week which raised the price of HDPE further to US $ 1320/MT in the week of 28th May 2007. HDPE is likely to remain bullish in June 2007 and the price could remain as high as US $ 1330-13400/MT in June 2007. PP Tighter availability & leaner supplies caused PP to rise to US $ 1300/MT in the week of 28th May 2007. June 2007 may not see much change since the demand does not seem to pick up. Only supply could keep the price around US $ 1300/MT in June 2007. PVC Asian prices of PVC remained strong but at the same level as that of the week of 21st May 2007 but the global demand is strong particularly South America. The static price of US $ 950/MT in 28th May 2007 is deceptive. It could easily go up by another US $ 10-20/MT if not any higher. June 2007 could witness the price of PVC around US $ 970-975/MT. GPPS GPPS price increased by US $ 10/MT in the week of 28th May 2007 & reached US $ 1450/MT due to increased cost of styrene monomer. It is to be seen whether higher prices could be sustained in the Asian market in June 2007. ABS Higher price of styrene monomer was the primary cause of further increase of price of ABS to US $ 1670/MT in the week of 28th 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 & feedstocks.