Price trends of oil, polymer feedstocks & commodity polymers for the week of 2nd July 2007

SUMMARY Oil prices surged above US$70/barrel due to strong demand for fuel ahead of the conventional high demand summer season. Naphtha increased on account of strong crude prices despite weakening of derivative prices Olefin (both ethylene & propylene) feedstocks declined despite an increase in the price of oil. VCM became stronger on account of market surge in PVC. EDC was also stronger as market for PVC turned robust. Styrene monomer (SM) was at a lower price compared to the last week as price of downstream GPPS mellowed. Market for all polyethylenes was robust this week. PP market witnessed some upward movement. PVC prices showed upward movement as it regained some of its good performance. Both styrenics (GPPS & ABS) remained lackluster & were at lower price band. July 2007 is expected to show higher price of oil. Consequently all feedstock & commodity polymers could go up in prices. However PVC, LDPE and PP are likely to move upwards in July 2007 due to good market conditions. CRUDE OIL Crude oil prices rose by over 2% in the week of 2nd July 2007, reaching a 10 month high at US$70.68. This surge in prices was triggered by strong demand for fuel ahead of the conventional high demand summer season. Prices are expected to remain in a high price range in the summer, when holiday goers traditionally take to the road and herald the peak driving season in USA. NAPHTHA Strong crude oil prices supported a spike in naphtha prices. Prices surged to US$690/mt level in the week of 2nd July 2007. Prices are not expected to dip as oil prices are expected to continue on their upsurge. POLYMER FEEDSTOCKS ETHYLENE Despite a surge in oil and naphtha prices, Asian ethylene prices did not show movement. Ethylene markets remained subdued in the week of 2nd July 2007, at US$1050/MT. Low buying activity could keep ethylene prices at a subdued level in the next few weeks. PROPYLENE Propylene, despite an increase in the price of PP, remains sluggish at about US$1000/MT in the week of 2nd July 2007. It could go up to about US$1025-1050/MT in July 2007. EDC After last weeks' dip, EDC returned to the sheen it attained over the past fortnight in the week of 2nd July 2007. Chinese PVC market appears to have returned to last few weeks' good performance. It is likely to remain at around US$425-440/MT in the next couple of months VCM VCM was strong in the week of 2nd July 2007 due to robust demand for downstream PVC. Chinese PVC market appears to have returned to last few weeks' good performance. VCM achieved price level of around US$800-820/MT and is expected to maintain the price range in the rest of July 2007. STYRENE MONOMER (SM) A fall in benzene prices has affected a dip in SM prices to US$1,340/mt levels. Low levels of buying activity due to lackluster demand for downstream Polystyrene has kept prices low in the week of 2nd July 2007. POLYMERS LDPE LDPE saw price realization at higher levels in the week of 2nd July 2007 at US$1460/MT. Prices are expected to remain higher. July 2007 future appears to show that the price could be higher at US$1480-1500/MT. LLDPE LLDPE prices steadied at higher price to levels above US$1,370/mt in the week of 2nd July 2007. July 2007 could witness a price band of US$ 1370-1380/MT. HDPE Good demand by film manufacturers has kept price of HDPE at a robust level of US$1355-1360/MT. HDPE offers increased by almost twenty dollars in the week of 2nd July 2007. Prices are expected to sustain a higher price range in the month of July 2007. PP The market for PP saw some positive movement, as prices ranged between US$1350-1360/MT in the week of 2nd July 2007. Buyers are adopting a guarded approach due to belief that the prices have saturated at a high level along with inventory build up. Prices are expected to be in a higher price range of US$1350-1370 in the month of July. PVC The price of PVC remained stable at US$980-990/MT in the week of 2nd July 2007. Market sentiments for PVC were stable along with restricted supply in the week of 2nd July 2007. PVC is not likely to remain as strong as expected earlier but still could go up to US$1000-1020/MT in July 2007 GPPS GPPS prices mellowed in the week of 2nd July 2007 on account of lackluster demand from China. GPPS remained somewhat subdued at around US$1490/MT in the week as buying interest waned. It is expected that GPPS would remain in the range below US$1500/MT in July 2007. ABS As buyers abstained from buying, ABS prices were subdued at US$1660/MT in the week of 2nd July 2007. ABS prices are expected to keep in the price range of US$1690-1710/MT in the month of July 2007 corresponding with declining feedstock costs.