Price trends of oil, polymer feedstocks & commodity polymers in Asia for the week of August 20, 2007

SUMMARY Crude oil futures rose marginally to US$72 for September delivery in the week of August 20, 2007 on the New York Mercantile Exchange. The past few weeks have witnessed a dip in prices prompted by news of a US economy slowdown. Naphtha rose despite dipping crude oil prices, as a result of rising demand. Persistent stringent supplies continue to prompt higher ethylene prices in Asia, though propylene remained lackluster. Styrene monomer (SM) prices dropped as buyers adopted a "wait and watch" stance. Robust buying has kept EDC prices higher, while VCM markets stagnated at last weeks' levels. Market for all the PE polymers and PP remained stagnant. PVC witnessed a robust price hike, while GPPS and ABS rose marginally. CRUDE OIL Crude oil prices saw a marginal increase to US$72 for the week of August 20, 2007. This hike was supported by announcement of an unanticipated cut in the US Federal Reserve's discount rate. Also supporting oil prices was concerns prevalent in the market about news that Hurricane Dean may blow into the Gulf of Mexico this week. On the whole, this month has seen oil prices fall from near record highs on apprehensions of a cut in economic growth rate in the USA due to losses in the U.S. credit market. NAPHTHA Naphtha prices, that had been adhering to the trend of oil prices, deviated as they spiked in Asia in the week of August 20, 2007. Escalating demand from the Asian region has exerted pressures on naphtha prices, resulting in a 15 dollar rise. Naphtha rose to US$670/MT in this week. POLYMER FEEDSTOCKS EDC Robust demand from Chinese buyers has given an upward thrust to EDC prices in Asia this week. EDC prices rose to US$480/MT in Asia in the week of August 20, 2007, with limited cargoes demanding US$10-15/MT more. The gap between sellers intention at US$500/MT widened as buyers preferred to maintain buying interest at last weeks levels. VCM As buyers await next months' offers, VCM markets remained calm this week. Prices stagnated at last weeks' levels of US$830/MT in the week of August 20, 2007. Market conditions of tight supply and rising feedstock costs indicate that VCM prices will be hiked in the next few weeks by producers. Japan's Tosoh, back onstream after an unplanned shutdown, is facing diminishing stockpiles, and is contemplating limiting VCM exports next month in September. ETHYLENE Tight availability of ethylene across Asia has resulted in a quantum leap in prices. Ethylene prices rose to levels above US$1310/MT in the week of August 20, 2007. However, caution prevailed at the buyers' end as they were reluctant to procure material at such elevated prices, on account of uncertainty of downstream PE markets. Buyers seem unsure of the movement that currently strong downstream PE markets will follow in the coming weeks. Ethylene prices are expected to rise further in the next month, even as buyers resist offers at the present level. PROPYLENE Propylene markets seemed to lag behind as compared to the spectacular rise in ethylene prices. Propylene prices stagnated at last weeks' level of US$1120/MT in Asia in the week of August 20, 2007. STYRENE MONOMER Benzene prices that stagnated last week, bounced back above US$970/MT, in line with rising oil prices, in the week of August 20, 2007. Rising feedstock benzene prices failed to sustain Styrene Monomer prices this week. SM prices dipped marginally to US$1385/MT in the week of August 20, 2007 in Asia. The number of transactions for the week was trimmed down as buyers preferred to "wait and watch". Styrene monomer prices are expected to fall in the next month. POLYMERS HDPE Rising feedstock costs have not yet taken a toll on HDPE prices in Asia. HDPE prices have stagnated at US$1415/MT in Asia in the week of August 20, 2007, on account of fewer transactions in the market. Rising ethylene prices are expected to effect HDPE prices next month, resulting in higher prices. LDPE Stringent supplies coupled with lack of supplier offers, have maintained a calm in LDPE markets across Asia in the week. LDPE prices stabilized at last weeks' level of US$1540/MT in the week of August 20, 2007, in the absence of much market activity. LLDPE LLDPE prices stagnated at US$1410/MT in the week of August 20, 2007 in Asia. Suppliers closed deals for August on tight supplies. Robust export demand for LLDPE was pegged stronger than demand from buyers in China, where deals were heard to have transacted at levels at least 20-30 dollars lower than US$1410. PP PP markets in Asia remained lackluster and stagnated at last week's level of US$1400/MT in the week of August 20, 2007. Several suppliers are reported to have deferred offers this week. Strong propylene prices have prompted major Asian producers to propose a US$20-25/MT hike in offers for September. However, the market estimates a very limited future price hike as the high demand season approaches a fag end in Asia. PVC Stringent supply scenario in tandem with bullish global demand has triggered a PVC price hike in Asia. PVC prices rose to US$1020/MT levels in Asia in the week of August 21, 2007. Key Asian suppliers have been reported to have hiked September offers by twenty dollars, though current buying interest remains firm at US$1010-1020/MT levels. GPPS Polystyrene buyers in Asia, particularly China, adopted a wait and watch perspective, leading to a lull in the markets. Despite dipping feedstock (SM) prices, GPPS prices rose marginally to US$1480/MT in Asia in the week of August 21, 2007. ABS Higher ACN prices coupled with almost stagnant SM rates has allowed ABS offers to get a marginal upward edge this week. ABS prices rose by ten dollars to US$1700/MT in Asia in the week of August 21, 2007. Producers have incurred high production costs and are not willing to offer material below US$1700/MT levels.
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