market report 100610

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PolymerscanVolume 33 / Issue 23 / June 9, 2010

Polymers

Polyvinyl Chloride 3Low Density Polyethylene 4Linear Low Density Polyethylene 5High-Density Polyethylene 7Polypropylene 8Polystyrene 9Acrylonitrile Butadiene Styrene 10Polyethylene Terephthalate 11

Polymer Feedstocks: Olefins

Ethylene 14Ethylene Glycol 15Propylene 16Butadiene 17

Polymer Feedstocks: Aromatics

Paraxylene 19Styrene 20

Polymer Feedstocks: Intermediates

Purified Terephthalic Acid 21Acrylonitrile 22Ethylene Dichloride / Vinyl Chloride Monomer 22Dimethyl Terephthalate 23

News 23

Americas and Asian Polymer Spot Price Assessments

FAS Houston US Contract US Domestic FOT Brazil* CFR PERU CFR FE Asia CFR SE Asia CFR South Asia China ($/mt) dlvd railcar ($/mt) ($/mt) ($/mt) ($/mt) ($/mt) Domestic

(cts/lb) (Yuan/mt)

PVC SUSP 810-820 42.50-43.50 936.70 -958.74 —- 930-940 944-946 954-956 —- —-

LDPE G-P 1499-1521 70.00-71.00 1542.80 -1564.84 1590-1600 1480-1490 1334-1336 1409-1411 —- 10900-11000 LLDPE (Butene) 1146-1168 66.00-67.00 1454.64 -1476.68 1470-1490 1370-1380 1169-1171 1189-1191 1299-1301 10100-10200

HDPE Inj 1102-1124 64.00-65.00 1410.56 -1432.60 1470-1480 1340-1360 1124-1126 1139-1141 1174-1176 —- Bmldg 1080-1102 64.00-65.00 1410.56 -1432.60 1470-1480 1340-1360 1114-1116 1149-1151 1179-1181 —- Film 1190-1202 66.00-67.00 1454.64 -1476.68 1440-1450 1360-1380 1124-1126 1139-1141 1189-1191 9500-9600 Yarn —- —- —- 1214-1216 1229-1231 —- —-

PP Homo Inj/Raffia+ 1234-1256 64.50-65.50 1421.58 -1443.62 1520-1530 1410-1430 1199-1201 1229-1231 1244-1246 10099-10101 Fiber —- 65.50-66.50 1443.62 -1465.66 —- —- —- —- —- Copol 1300-1322 —- 1570-1580 1460-1480 1339-1341 1359-1361 1369-1371 —- IPP Film 1254-1256 1274-1276 1289-1291 —- BOPP 1254-1256 1274-1276 1289-1291 —-

PS G-P 1445-1455 66.00-68.00 1454.64 -1498.72 —- 1194-1196 1194-1196 —- —- HIPS 1600-1610 73.00-75.00 1608.92 -1653.00 —- 1319-1321 1319-1321 —- —-

ABS Inj —- 112.00-114.00 2468.48 -2512.56 —- 1879-1881 1879-1881 —- —-

PET bottle grade 1367-1389# 1411-1433## 1179-1181 ** 1229-1231 ** —- —-

Notes: All price assessments reflect spot trades with the exception of US Contract Delivered railcar. * FOT Brazil assessments are for export material via truck to MERCOSUR markets. For AsianPVC, PS, and ABS, FE Asia refers to China. All Asian polymer assessments are basis L/C 0-30 days Credit differentials calculated using 1 month LIBOR +1.5%. + PP Raffia grade reflectsassessments for Asia only. # US PET bottle grade refers to DDP US West Coast. ## US PET contract price is in $/mt. ** Asian PET prices denote FOB North East Asia (South Korea, China) andFOB Southeast Asia (Thailand, Indonesia) respectively.

FOB Middle East Weekly Polymer Netbacks ($/mt)

Thursday Friday Monday Tuesday Wednesday Average

HDPE 1094-1096 1092-1093 1089-1091 1087-1088 1084-1086 1089.0-1091.0LDPE 1297-1298 1297-1298 1294-1296 1294-1296 1294-1296 1295.0-1297.0LLDPE 1149-1151 1139-1141 1129-1131 1129-1131 1129-1131 1135.0-1137.0PP Raffia/Injection 1179-1181 1174-1176 1169-1171 1164-1166 1159-1161 1169.0-1171.0

Notes: FOB Middle East netback denotes CFR Far East Asia assessments minus the prevailing container freight rate from Al-Jubail to Shanghai for a standard 20-foot container.

Daily Polymer Assessments

Thursday Friday Monday Tuesday Wednesday Average

CFR FE Asia ($/mt)

HDPE film 1134-1136 1132-1133 1129-1131 1127-1128 1124-1126 1129.2-1130.8LDPE 1337-1338 1337-1338 1334-1336 1334-1336 1334-1336 1335.2-1336.8LLDPE 1189-1191 1179-1181 1169-1171 1169-1171 1169-1171 1175.0-1177.0PP Homo 1219-1221 1214-1216 1209-1211 1204-1206 1199-1201 1209.0-1211.0

FD NWE (Euro/mt)

LDPE 1295-1300 1295-1300 1295-1300 1295-1300 1300-1305 1296.0-1301.0LLDPE 1245-1250 1245-1250 1245-1250 1245-1250 1245-1250 1245.0-1250.0PP Homo 1275-1280 1275-1280 1275-1280 1290-1295 1290-1295 1281.0-1286.0

FCA Antwerp (Euro/mt)


FAS Houston ($/mt)


Notes: The weekly average represents the average of Thursday through Wednesday of the previous week.

Contents

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PLATTS POLYMERSCAN JUNE 9, 2010

Copyright © 2010, The McGraw Hill Companies 2

Euro Contract Assessments (Euro/mt)

Germany Holland Italy France Spain Britain* FD NWE CP**

PVC susp 955-975 955-975 955-975 955-975 845-865 890-915 1153-1177

LDPE G-P 1375-1380 1375-1380 1350-1355 1375-1380 1360-1365 1180-1185 1660-1666

LLDPE C4 (Blown film) 1340-1345 1340-1345 1340-1345 1340-1345 1340-1345 1130-1135 1617-1623

LLDPE C4 (Cast stretch film) 1340-1345 1340-1345 1340-1345 1340-1345 1340-1345 1140-1145 1617-1623

LLDPE C6 (Blown film) 1400-1405# — — — — — —

LLDPE C6 (Cast stretch film) 1400-1405# — — — — — —

HDPE Inj 1210-1220 1210-1220 1210-1220 1210-1220 1210-1220 1062-1066 1460-1473

HDPE Bmldg 1195-1200 1195-1200 1195-1200 1195-1200 1195-1200 1053-1057 1442-1448

HDPE Film 1180-1190 1180-1190 1180-1190 1180-1190 1180-1190 1062-1066 1424-1436

HDPE HMW 2-5 1215-1220 1215-1220 1215-1220 1215-1220 1215-1220 1069-1073 1467-1473

HDPE HMW 5-10 1210-1215 1210-1215 1210-1215 1210-1215 1210-1215 1065-1069 1460-1467

PP Homo Inj 1373-1378 1373-1378 1373-1378 1373-1378 1373-1378 1141-1145 1657-1663

PP Copol 1423-1428 1423-1428 1423-1428 1423-1428 1423-1428 1182-1186 1718-1724

GPPS 1495-1505 1495-1505 1495-1505 1495-1505 1495-1505 1236-1244 1804-1817

HIPS 1565-1575 1565-1575 1565-1575 1565-1575 1565-1575 1294-1302 1889-1901

EPS 1400-1410 1400-1410 1400-1410 1400-1410 1400-1410 1157-1166 1690-1702

ABS GP/Nat 1710-1720 — 1710-1720 1710-1720 1710-1720 1414-1422 2064-2076

ABS Ave color 2060-2070 — 2060-2070 2060-2070 2060-2070 1703-1711 2486-2498

ABS Auto black 1820-1830 — 1820-1830 1820-1830 1820-1830 1505-1513 —-

PET bottle grade 1420-1440# — 1390-1410 1420-1440 1425-1445 1380-1405

PET bottle grade — — — — — 1669-1700##

APET film grade 1390-1410#

Notes: *FD Britain = FD UK, with assessments in British Pounds per metric ton. **FD NWE CONTRACT PRICE denotes FD Germany converted into US dollars. # LLDPE C6, PET bottle grade, APETfilm grade assessments are basis FD NWE in Euro/mt. ## PET bottle grade assessments basis FD UK are in Euro/mt. PET assessments refer to regular business at prices negotiated betweenbuyers and sellers on a monthly basis. LLDPE C6 denotes products from Ziegler-Natta catalyst.

Platts European Polymer Spot Price Assessments

FOB NWE FD NWE FCA Antwerp CFR Russia* CFR Turkey** FD UK

($/mt) (Eur/mt) (Eur/mt) (Eur/mt) ($/mt) (GBP/mt)

PVC SUSP 950-960 775-795 — 710-740 1015-1025 —

LDPE G-P 1530-1540 1300-1305 1280-1285 1320-1330 1520-1530 —

LLDPE (Butene) —- 1245-1250 1225-1230 1300-1310 1440-1450 —

HDPE Inj 1290-1300 1070-1075 1050-1055 1110-1120 1280-1290 —

Bmldg 1320-1330 1080-1085 1060-1065 1110-1120 1280-1290 —

Film 1330-1340 1095-1100 1075-1080 1110-1120 1280-1290 —

PP Homo Inj 1335-1345 1290-1295 1260-1265 1325-1330 1380-1390 —

PP Raffia — — — — 1380-1390 —

PP Copol 1415-1425 1340-1345 1310-1315 1375-1380 1460-1470 —

PS G-P 1473-1483 1250-1260 — — 1500-1510 —

HIPS 1558-1568 1320-1330 — — 1585-1595 —

EPS 1538-1548 1305-1315 — — 1565-1575 —

ABS GP/Nat 1985-1995*** 1776-1785 — — —

PET bottle grade — 1170-1180 — — — 990-1000

PET bottle grade — — — — — 1198-1210#

Recycled PET — 900-910 — — — 790-800

Recycled PET — — — — — 956-968#

Notes: FOB NWE prices are based on exports of 300mt or more. *CFR Russia denotes CFR St Petersburg; ** CFR Turkey denotes CFR Istanbul; *** ABS GP/Nat denotes CFR NWE in $/mt. #PET bottle grade and Recycled PET assessments for FD UK are in Euro/mt. Recycled PET assessments are for a hot wash flake without food approval.



Polyvinyl Chloride

Europe

Negotiations for NWE June PVC contract prices began inearnest this week, with many sources reporting a tighter marketin the region giving producers further hope that they can targetsignificant increases. One major producer reported that theyhad continued to look for an increase of Eur60/mt ($72/mt)and said: “Demand is strong. I’m spending a lot of time tryingto find product for all our current orders. There is no sparematerial because demand is so good. Production is flat outeverywhere.” A second producer added: “We are holding outfor the Eur50/mt on a ‘take it or leave it’ basis and GBP40/mt($58/mt) for the UK.” The producer continued to say: “I’mvery optimistic that we shall succeed in the UK specifically asproduct is tight. Profile demand is good and better than Mayso although it’s early days I am very optimistic.” A converter inthe UK reported settling June at an increase of GBP25/mt andalthough this was lower than the producers reported target, theconverter agreed that supply was tighter now. “There is aperception now that material is tighter. All producers seem tohave full order books and this is reflected in the increases forJune so far.” The converter added that downstream demandwas also on the up and said: “We are very busy at the moment,there is definitely some pick up, although it could betemporary.” A third producer was more conservative with hisestimation for June however. “In the North of Europe demandis definitely better and I think Eur30/mt is achievable, althoughwe are still in negotiations,” the producer said. The outlook forSouthern Europe—and Spain in particular—was less rosyaccording to the source. “Spain is more or less like May. Themarket is quiet and flat, although not worse than it was. At thismoment we are targeting an increase of Eur20-30/mt in Spain.We started higher, but demand dictates lower. Realistically Ithink we will have to focus around Eur20/mt,” the source said.The spot market in NWE was less bullish than the contract side,although there were some signs that things were improving.One trader and distributor selling into Germany said: “We havemanaged to pass on some price increases, but there are a lot ofpeople adopting a ‘wait and see’ position now. Some customersthink there may be a fall coming in July and are concernedabout whether to buy now.” The trader added: “I would put netprices at between Eur790-830/mt. Above Eur800/mt isdefinitely achievable with some customers and it does feel asthough the really low offers have now left the market.” Pricescontinued to fall in Turkey this week as demand tapered offamid uncertain macro economic conditions. “The market isbecoming effected by the macro economy and politics. It iseffecting all plastics. We have seen buying stop as buyers areafraid of another downturn if crude or ethylene drop again,”one trader said. European origin product was still the mostcompetitively priced however at around $1,020/mt CFR for K-67 grade and $1,040/mt CFR for K-58 and K-70 according tothe source. US product was priced between $930-950/mt CFR

before $45/mt anti dumping and 6.5 percent duty. Inproduction news, a source at Spain’s Ercros said the companywas close to finishing upgrade work to increase productioncapacity at the Vila-Seca plant in Tarragona, Spain. The workshould be finished by the end of August when capacity willincrease to 175,000 mt/year. The upgrade of the plantinvolved the addition of a fourth reactor which will increaseproduction capacity by around 40,000 mt/year.

Foreign exchange

Eur1 to $ 1.2070 £1 to Eur 1.2097

Polymer Spot Freight Rates ex-Middle East ($/mt)

From: Middle East Middle EastTo: 25-100 mt >100mt

East China 35-45 35-45South China 40-45 40-45India 15-25 15-25Southeast Asia 25-35 25-35NW Europe 80-90 80-90Turkey 90-100 90-100US Gulf 140-150 140-150Latin America 140-145 133-137

Notes: Please refer to the methodology guide for details on port locations.

SUBSCRIBER NOTES

Subscriber notes

SUBSCRIBER NOTE: Platts has introduced West Coast LatinAmerican polymer price assessments for LDPE, LLDPE, HDPE,PP and PVC. The assessments will be basis CFR Peru withcredit of 90-150 days and reflecting parcel sizes between100-300 mt. Please direct all feedback to Ihsan Rahim,managing editor for Americas Petrochemicals at tel: +1-713658 3206, or email: [email protected], with a cc [email protected] and [email protected].

Metals

Aluminum US Jun 08 cts/lb 90.437Tin US Jun 07 cts/lb 740Tin Europe Jun 04 $/mt 17918-17978

Global PP Prices

900

1350

1800

2250

2700

09-Jun 14-May 21-Apr 26-Mar 03-Mar 04-Feb 12-Jan

CFR FE Asia ($/mt)FD NWE (€/mt)FAS Houston ($/mt)

POLYMERS

United States

The US PVC price was talked in a wide range this week, withsome deals heard done below $800/mt. However, sources saidthose deals were traders selling short and did not reflect theactual value in the US. “From a producer’s perspective, youdon’t want to establish that position,” a source said. “But ifenough deals get done at that level, it could make this market.From a feedstock perspective, the market is going that way. Butit’s not there yet.” One source said prices were falling, but wereyet to fall to $800/mt. “You have to look at the domestic priceand domestic demand,” a source said. “If the export price fallsbelow $800, the producers will just sell it all domestically if thedemand is there.” The source said the deals done below$800/mt would require the price to fall to $740-750/mt in July.But with domestic demand strong, he said he did not expectproducers to be willing to go that low. “No one is at $800/mtyet,” he said. The US price this week was assessed at $815/mtFAS Houston, down $40 from last week. The US delivered pricewas assessed at 43 cents/lb, down 3 cents from last week.

Asia

The CFR China PVC price benchmark ticked down $4/mt onthe week to settle at a six-month low of $945/mt, as themarket continued to be hit by weak spot demand. End-usersand distributors in China remained on the sidelines,expecting a further slide in offers for July-delivery business —especially from the US. US PVC prices were in the mid-$800s/mt FAS Houston late last week, which can be translatedto around $940/mt CFR China, including typical freight costof around $70-80/mt. However, Chinese buyers expect USPVC prices to decline further to $900-910/mt CFR China, asthe US PVC market will likely be hit by falling ethylenefeedstock values there. “Lots of Chinese buyers flashing backwhat happened in 2008,” a trader said. Many Chinese buyersand traders lost a lot of money in late 2008, as the Asian PVCmarket collapsed more than $700/mt within three months.Elsewhere, prices basis CFR India dropped to $910-920/mt,compared with $955/mt the previous week. Ex-Korean PVCwas offered at $920-930/mt CFR India this week, but end-users were reluctant to accept the offers, keeping their bids at$900-910/mt. On the other hand, some market sources saidthe Asian PVC market was seeking bottom as supplies fromregional producers will likely turn tight due to possible runcuts. For example, Taiwan’s Ocean Plastics plans to reduceruns at its 150,000 mt/year PVC plant in Taoyuan to 80% inJuly from 85% in June due to tight vinyl chloride monomerfeedstocks. South Korea’s LG Chem was also reported to beconsidering run cuts at its PVC plants in Yeosu and Daesan(total capacity 750,000 mt/year). In addition, carbide pricesare increasing in tandem with rising power costs, which willlikely push carbide-based PVC prices in the near future.

Latin America

PVC prices were reported falling in the West Coast LatinAmerican market. US was offering PVC to Peru last week at$980/mt CFR. A buyer in Peru said they believe PVC offerprices are going to be reduced by $50/mt or more. “We are

waiting for PVC offers this week and we heard in the marketprices should be down at least $50/mt,” said the source. AUS trader said he heard CFR Peru offers this week at$940/mt. He said the domestic price, plus shipping andprofit, could land product in Peru at that level. The higherprices, he said, were probably a result of traders or sellersadding on additional costs or margins. Freight rates from theUS to Peru were near $100/mt.

Low Density Polyethylene

Europe

European spot values have increased to Eur1,300-1,305/mt($1,572/mt) FD NWE, as offers continued to move up in a thinmarket, sources said. Many traders reported lack of promptprime product, as allocations from producers remained thin.Some spot offers were reported in a Eur1,320-1,370/mt FDNWE range but this did not attract buyers, sources said. Somesources felt that prices improved at a slower pace, as globalbearishness led to a more conservative volume approach.Despite thin supply, spot buying interest appeared morecautious this week, as converters addressed immediate shortsdirectly with producers. Traders also refrained from buildingstock, preferring to do back-to-back business only. “I am notdoing much business but I am not actively pursuing more,everyone is jittery as China is sliding so people [traders] areafraid of a snowball effect and hold of purchasing,” a tradersaid. Producers however said the persistent slide in Asia wouldhave little effect as low European inventory level continued tosupport prices. “LDPE is a never-ending story, the main issuefor us remains to keep our customers running as we have lowstocks,” a producer said. “We are completely sold out for June,the market is short and tight and we have a very good orderbook,” a second producer said. Converters, while confirmingthin allocations from producers, grew increasingly concernedabout this own demand. “Our volumes in shrink film [servingthe beverage industry] are slowing down for 10 days now as ourcustomers have inventories,” a converter said. “We are slowlygetting to a low season, though the season has started muchearlier this year and customers already built inventories somaybe volume will pick up again in August,” he said. “We willstart decreasing our resin purchases in July.” Some otherconverters agreed, also seeing a margin drop off in theirvolumes. “Our lamination film volumes are stable, mainly dueto shortages of the PET films, which we blend withpolyethylene; PET film mainly go into more sophisticated hightech applications now, so it is hard to secure volume for foodpackaging,” a second converter said. “While food packagingand labeling segments are stable, we see lower volumes insurface protection and bubble wrap films, as our customers areholding back now, it is all about the cost for them,” he added.“Demand is not as terrific as it was but it is still at good levels,it has eased a little,” a third converter said. Meanwhile in thecontract market gross values were mainly discussed at a Eur30-40/mt increase versus May. Gross values reported by theproducers were at a Eur1,385-1,410/mt range, with some



producers looking at a bi-monthly result, combiningincreases in May and June together. But other producersfocused their efforts on June as a stand alone month,targeting a Eur50/mt increase. “Our gross values are above [a]Eur1,400/mt level and we have increased prices byEur50/mt,” a producer said. Converters contacted this weekreported gross values at a Eur1,340-1,375/mt FD NWE level.Gross values remained stable this week. Gross values in theUK were assessed GBP10/mt ($14.57/mt) higher this week atGBP1,180-1,185/mt FD UK. In production news, forcemajeure at LyondellBasell’s Aubette, France plant remained inplace this week, a company source said.

United States

Low density prices fell as more material slowly made its wayto the export market. There was a deal talked at 65 cents/lbFAS Houston, which several traders said they would havejumped at had they been offered the resin. Other sourcessaid LDPE was still at and over 70 cents/lb in railcarsdelivered to Houston. 70 cents/lb was too high for traders,however, as there was less expensive LD available from otherproducers outside the US. There continued to be talk ofEuropean LDPE making its way to South America and therewas Iranian LDPE also on the market. In addition, Dow’sChile LDPE plant was expected back up by the end of Juneafter being idled after the massive earthquake struckConcepcion, Chile in February. While it is only a relativelysmall plant at 50 kt/year any additional production waswelcome to a region extremely tight on LDPE. In other plantnews, LyondellBasell was still on schedule to restart its 245kt/year plant in Morris, Illinois by the end of June.

Asia

Low density polyethylene fell $5/mt on the week to end$1,335/mt CFR Far East Asia, while Southeast Asia prices dipped$10/mt to end at $1,410/mt CFR. Despite poor marketsentiment, LDPE was largely supported by tight supply in theregion. Middle Eastern producers such as Qapco were heardoffering at $1,370/mt CFR China, while a Southeast Asianproducer sold cargoes into China at $1,450/mt CFR China,which is import tax exempt under a Free Trade Agreement.However, buyers were tracking fluctuations in stock markets,crude and ethylene prices. “They are still unwilling to buy inlarge quantities. They’ll buy on a need-to basis,” a Malaysianproducer said of the Chinese market. Sellers were unwilling tolower offers, arguing that supply is tight and they have bettersales prospects in other parts of Asia. Sinopec rolled over its ex-works price from last week at Yuan 11,000/mt ($1,611/mt), butchanged it to a listed price, which means buyers will berefunded the difference if the settled prices are lower. In SEAsia, a Singapore-based trader offered LDPE at $1,420/mt CFRSE Asia. In plant news, Thai PTTPE plans to start up its 300,000mt/year LDPE plant next week after months of delays.

Latin America

June LDPE Brazilian offers to Mercosur (Argentina) wereheard at $2,030-2,080/mt CFR while to Paraguay and

Uruguay at $1,750-1,800/mt CFR. “LDPE continues (to be)short in the market, and we should see availabilityrestrictions this month,” said a source at Braskem. A buyerin Paraguay said they should buy LDPE from Brazil thismonth. “We are worried with the drop in prices on LDPE atthis time, but we should nevertheless be purchasing it,” saida buyer. Brazilian LDPE offers to Andean Countries andCentral America were reduced by $50/mt and they werepegged at $1,630-1,700/mt CFR for film. European offer toPeru was heard this week at $1,560/mt CFR. For theBrazilian domestic market, Braskem had flat prices comparedto May at Reals 4,250/mt CIF for LDPE film. Korean materialwas meanwhile reported offers at $1495/mt CFR Peru.

Linear Low Density Polyethylene

Europe

European spot values remained at Eur1,245-1,250/mt FD NWE($1,506/mt) Wednesday, despite attempts to offer higher,trading sources said. Buyers and sellers appeared far apart thisweek. Trading sources stressed that prompt availabilityremained constrained as European producers lacked sufficientinventory, while imported volumes remained marginal andwere not overwhelming the market. “The imports are so smallthey are not even causing a ripple in the market,” a producersaid. Despite firm prompt availability, converters refrained fromchasing spot offers at traders. This reluctance to commit fromconverters led to some downward correction at the higher endof the spot offers, market sources said. “I could sell higher lastweek but some buyers do not want to pay higher than [a]Eur,1230/mt FD NWE level this week,” a trader said. “I thinkJune spot volumes are covered that is why it is harder to bookbuyers now,” a second trader said. In the Asian market,meanwhile, prices continued to fall with Far East Asian pricesending at $1,170/mt CFR Wednesday. Despite prominentbearishness in Asia, European LLDPE producers stressed thatrelentless European demand, thin inventories and lack ofmarket moving imported volumes sustained firmfundamentals. “In Asia the falls are sentiment driven, they havereacted to lower crude and some traders got rid of stock, thedirect customers in Asia are still buying, I think that the[currently] depressed Asia is a short-term phenomenon,” aproducer said. “Asia is just a side show and the problems therewill get resolved and it’s weak sentiment is not affectingEurope.” European converters said that they had no issues tosecure C6 grades but struggled with C4 allocations from onemajor supplier. “One supplier has reduced volume allocationsin June as they have very thin stock, which they have not beenable to rebuild yet,” a converter said. “It is not a problem to getvolume from the rest.” Converters started to mention someoffers for July volume from the Middle East but this was notcorroborated by the rest of the market at the time of press.“LLDPE will be more under pressure and the gap with LDPEwill grow further as we are getting more offers from traders forMiddle East product,” a converter said. “No one will buy morethan needed in Europe now, Turkey is down, Asia is down,” a



second converter said. Producers reported strong volumes inJune from most segments. Converters reported a marginaldownturn in end-user demand in some specific sectors.“Volumes in pallet wrapping segment are stable, onlymarginally down, but stretch film for beverage industry is moredown, and I am not sure why,” a converter said. Producers saidwhile there was some caution about July, plant maintenance inAugust would prevent a physical volume overhang in Europe,even if demand retreated. In the contract market values werereported at a Eur1,360/mt FD NWE level by the producers,while converters reported accepting Eur1,330-1,340/mt FDNWE. Gross values in the UK strengthened marginally thisweek to GBP1,130-1,135/mt FD UK. Ineos’ plant atGrangemouth was set to start up Friday from a brief shutdown.The plant went down over the weekend due to a technicalglitch, a company source said. The plant was also set forscheduled maintenance of five weeks, starting in August.

United States

Persistently weak export demand pulled down LLDPE pricesagain out of the US. There was a bifurcated export marketwith deepsea prices talked at 47-48 cents/lb in railcars,against traders working the Latin American market withvalues closer to 50 cents/lb in railcars. Even at 50 cents/lbfor Latin America, there was little demand. Some converterswere only interested in securing a container, about 18mt, asthey did not want to build inventory while the market wasfalling. A producer said June would be a month of fluxwhere buyers did not want to buy much and producers didnot have much pressure to sell. Liquidity was expected to bepoor until there was more clarity on when the bottom ofthe market will be reached. Traders looked at integratedproducers’ cost of ethylene from ethane still at around 23-24cents/lb and believed this gave makers plenty of room todecrease prices instead of reducing operating rates. “Whycan’t they afford to sell at 45 cents/lb?,” a trader asked. Butproducers were content to build inventory and work to sellmore into the domestic market than reduce export offers.Even if domestic prices fall 8 cents/lb as some participantsexpected, producers would be better off selling domesticallyin the high 50’s cents/lb than dropping export prices.

Asia

The Asian linear low density polyethylene market pointeddownward this week as Far East Asia saw prices ending at$1,170/mt Wednesday, down $20/mt on the week, whileSoutheast Asian prices ended at $1,190/mt, dropping $35/mton the week. South Asian prices fell $30/mt to $1,300/mt,tracking the steep fall in Far East Asia prices last week. TheLLDPE market is weighed down by a seasonal lull period.Buyers were also anxious about the European debt problemsand falling crude oil prices Monday. Buying sentiment wascrushed Monday as LLDPE September futures on the DalianCommodity Exchange dropped Yuan 495/mt ($72/mt) onthe day to Yuan 9,415/mt, triggering a trading halt followingDCE’s 5% gain/loss limit. In response, several Chinesetraders lowered offers to the Yuan 9,000/mt level ($1,058/mt

on import-parity basis) compared with last week’s averageprice of Yuan 10,000/mt. Sinopec rolled over its ex-workslisted price from last week at Yuan 10,200/mt, where buyersare refunded the difference if settled prices are lower. Thearbitrage opportunity has been open between Far East Asiaand South Asia since last week. This has prompted sellers tomove LLDPE cargoes to India, fetching as much as$1,300/mt CFR India. Based on an average $75/mt freightfrom China to India, NE Asian sellers have a healthy margin.In plant news, PTT shut its LLDPE plant June 5 to divertethylene in an attempt to start up its new LDPE plant.

Latin America

Brazilian LLDPE offers to Paraguay dropped $130/mt related toMay, said a resin distributor. After the price reduction, LLDPEBrazilian offers in Paraguay were at $1,620/mt CIF. AParaguayan buyer said today they don’t see the necessity to buyLLDPE this month since the Asian product they recentlypurchased should be arriving soon. LLDPE Brazilian offers toAndean Countries and Central America went down in June$50/mt, said a source at Braskem. Resin offers from Brazil afterthe price reduction were heard at $1,430-1,490/mt CFR forbutene and at $1,480-1,540/mt for hexene. US LLDPE film offerto Peru was heard at $1,380/mt CFR. For the Brazilian domesticmarket, June LLDPE offers were at the same May levels due tothe fact that demand was still very healthy in the Braziliandomestic market and raw material prices just went down in theUS and not in Europe. Brazilian ethylene contract pricestypically follow the European contract prices movements witha month lag. Braskem’s LLDPE offers in the Brazilian domesticmarket were pegged at Reals 4,200/mt CIF for butene andhexene. Mexican LLDPE offers dropped 4% compared to Maybecause of lower international prices and slow demand, asource at state-owned Pemex said. “We saw some recoveryduring May, and we managed to close the month at 5% betterthan in April. However, even though this was the case, demandfor PE in Mexico is still quite low,” said the company source.LLDPE, after the drop was being offered in Mexico at 57-59cents/lb FOB Mexico City.

High-Density Polyethylene

Europe

European contract values in injection grade havestrengthened this week on the back of confirmed Junebusiness to Eur1,210-1,220/mt ($1,466/mt) FD NWE. Theincrease in contract values mirrored the increase infeedstock ethylene for June, market sources said. Someproducers reported achieving an increase of Eur20/mt inJune, with gross values at Eur1,220-1,230/mt FD NWE markbut this was not confirmed by converters at the time ofpress. Converters stressed that it was not an issue to sourceinjection grade, as imported alternatives started to appear inthe market. But spot values in injection grade remainedstable this week at a Eur1,070-1,075/mt FD NWE. Somesources said that the market was poised to soften as presence



of imports, mainly from Egypt, made buyers more reluctantto commit to current offers. Other sources disagreed, seeingcurrency still as a barrier to making the imported volumeattractive. In blowmolding grade, producers contacted thisweek continued to report increases of Eur10-20/mt versusMay, commenting on healthy demand and tighteravailability. Previous ethylene shortages left the inventorylevels thinner, producers said. European spot ethylene valueswere assessed lower since the end of last week at Eur915/mtFD NWE, with recent urgency to secure prompt volumes nolonger evident in the market as availability has improved,market sources said. Cracker reliability issues in the regionhave mostly been resolved and with that the need to coverprompt shorts has diminished, the sources said. Some sellinginterest for June ethylene molecules was present in the marketbut it has, so far, failed to attract incremental buyers. Whileethylene availability has improved, this was yet to be evidentin all geographies, a producer said, still reporting issues tosource ethylene for some of its HDPE assets this week.Blowmolding buyers expressed mixed views on availability.Some converters reported struggling to secure additionalvolume above agreed monthly allocations. Other convertersreported seeing a balanced market, with no pressingavailability issues. Converters said that they hoped to reach arollover, but were currently discussing a Eur10/mt increase.Gross values were assessed marginally higher this week atEur1,195-1,200/mt FD NWE, subject to change on furtheracceptance of increases from converters. Spot values inblowmolding grade, however, remained stable this week. Filmgrade had different dynamics this week. Uni-modal film wasseen balanced, while bi-modal film was tighter, sources said,commenting on a widening gap between the two grades.Producers reported achieving a Eur10-30/mt increase in Junevalues but feedback from converters was not yet conclusive.Gross values in film grade remained stable as did spot prices.In the UK market, gross prices remained stable this week,market sources said.

United States

Export prices fell across the board as demand weakened.Traders said it was hard to move any material at any price asbuyers expectations were for lower prices ahead. Blowmolding was talked in a wide range. For traders looking atdeepsea markets, buy ideas were under 45 cents/lb deliveredto Houston in railcars. For Latin America, buy ideas were at50 cents/lb in railcars, but for small quantities of a containeror two. “Whatever offer I make, a buyer will ask for a lowerprice,” a trader said. Producers, however, were in no rush toopen up spot offers to the market as they were either able tomove large quantities quietly within their own systemoverseas or they were building inventory and content to sellat higher prices into the domestic market. The HDPE filmmarket was also a mixed bag with traders saying converterbids in Brazil were all over the place. “There’s one bid at$1,200/mt and another at $1,400/mt (CFR),” a tradercommented. In this situation several traders said theypreferred to be on the sidelines and simply sell off their

inventory. Until prices reach a bottom, deals were likely tobe few, as neither traders nor converters want to take a risk.Producers, also do not want to chase the market lower as ithurts sentiment in the domestic market. Barring a hurricanein the USG or widespread plant outages in the US,participants expected June domestic prices to decrease. Onesupplier expected June contracts to fall 8 cents/lb.

Asia

YARN: Yarn grade fell $10/mt on the week to end at$1,215/mt CFR Far East Asia and CFR Southeast Asia rolledover from last week as supply remains relatively tight. AChinese trader reported selling a small ex-warehouse parcelTuesday at Yuan 10,300/mt ($1,210/mt import-parity basis),down Yuan 100/mt on the week. China’s Sinopec lowered itsex-works price by Yuan 200 to Yuan 10,400/mt. INJ/BLMDG:Wednesday, injection grade was down $45/mt to $1,125/mtCFR FE Asia, down $50/mt to $1,115 CFR SE Asia and down$35/mt to $1,165/mt CFR South Asia. Blow molding grade fell$50/mt to $1,140/mt CFR FE Asia, dropping $30/mt to$1,150/mt CFR SE Asia and falling $15/mt to $1,175/mt CFRSouth Asia. The drops were on poor buying sentiment andhigh availability of both grades in the domestic Chinesemarket and buyers were following the Far East Asian marketclosely. In the Chinese domestic market, Sinopec offered ex-works injection grade cargoes at Yuan 9,700/mt, up Yuan900/mt on the week and rolled over its blow-molding price atYuan 9,400/mt. Chinese traders lowered blow-molding gradeoffers by about Yuan 450/mt to Yuan 8,800/mt ($1,034/mtimport-parity basis) and several traders have reported sellingout injection grade. Blow molding grade was cheaper thaninjection grade in China, while it was the opposite inSoutheast Asia, reflecting the smaller dip for CFR SE Asiablow-molding grade. FILM: Film-grade fell again as marketparticipants looked to the Chinese market for cues. CFR FEAsia prices fell $15/mt on the week to $1,125/mt, while CFRSE Asia dipped $55/mt to $1,140/mt and CFR South Asia wasdown $25/mt to $1,215/mt. On top of market anxiety overfluctuating crude, falling ethylene spot prices and uncertainstock markets, the Chinese market has high inventories ofIranian-origin film. The most common 7000F-grade was heardbeing offered below $1,100/mt CFR China, but was not takeninto assessment due to its embargoed nature andspecifications. 7000F film has a melt flow index of0.04g/10min, below Platts methodology specifications of 0.07-0.18g/10min. Reflecting the uncertain market, Sinopecswitched its ex-works price of Yuan 9,600/mt ($1,406/mt) intoa listed price system that refunds buyers the difference if thesettled prices is lower. As a result of competitive prices, severalAsian producers have given the China market a miss for Juneallocations. Middle East cargoes were heard offered at below$1,140/mt CFR China, while cargoes to South Asia wereoffered about $1,200/mt CFR (L/C 60 days).

Latin America

A Brazilian resin distributor in Paraguay was offering HDPEin June at $1,620/mt CIF for film and at $1,650/mt CIF for



blowmolding and injection. According to the seller, theBrazilian HDPE offers went down $130/mt related to May. AParaguayan buyer said they should not buy HDPE this monthdue to the fact that they were receiving the Asian productthey bought last month. “We are worried with the constantdrop in prices this month, and we will only buy the absoluteminimum, possibly only LDPE,” said the buyer. The BrazilianHDPE producer Braskem reduced offer prices to the AndeanPact and Central America by $50/mt. After the pricereduction, Brazilian offers were at $1,430-1,490/mt CFR forfilm, injection and blowmolding. HDPE US offer to Peru washeard this week at $1,380/mt CFR for film. Elsewhere on theWest Coast, June deal prices between US and Colombia werepegged at $1,437/mt CFR for film and at $1,440/mt CFR forblowmolding. On the production side, Dow’s threepolyethylene plants in Argentina were reported working at90% of capacity. The plants have a combined capacity of480,000 mt/year of LLDPE, and 300,000 my/year of HDPE.According to the source, the two HDPE and the LLDPE plantsin Bahia Blanca, Argentina should be working at full capacityin 20 days. Dow’s cracker and polyethylene plants went onemergency shutdown due to technical problems in April, andthey went back on line the first week of May.

Polypropylene

Europe

The assessment for June monthly Northwest Europeanpolypropylene contract prices was talked higher again this weekalthough most producers eased on the Eur50/mt price hiketarget they were aiming for at the start of the month. “PlusEur50/mt is a hard target to reach. I think plus Eur30/mt is amore accurate picture. I’ve done most contracts at that level,” aEuropean producer said. Several converters said they are now ina better position to resist any steep price increases amid easingsupply constraints. With feedstock and Asian PP prices falling,buyers said they are more convinced that a plus Eur50/mt riseis no longer justified. “Markets are shifting to our favor,” aEuropean converter said. “I won’t accept anything more thanplus Eur20/mt.” Several other converters said they will insist ona price rise of Eur25-30/mt for their June contracts. “I’llprobably accept plus Eur30/mt. I’m not going to lose on thisone,” said a UK buyer. Demand remains firm, with one majorproducer citing a “shoot up” in orders from the caps andclosures sector. June is shaping up to be the “best month” so farthis year, the producer said, adding that the bulk of hiscontracts were concluded within the plus Eur30-40/mt rangewith “nothing below that.” Market sources said supply seems tobe in balance with demand at the moment as production unitspreviously offline come on stream. “The critical point of supplyavailability is over. There’s no panic anymore,” said a trader. Headded falling Asian prices are also giving consumers the optionto buy cheaper materials from overseas. European producerssaid their capacities are fully committed to their customers andnot offering spot materials. In the spot market, offers andreported deals were within a range of Eur1,280-1,310 FD NWE

for homo injection grade. “Supply is enough but you have topay for it,” said a trader. In Turkey, open market spot pricesremain weak, tracking the steady decline in feedstock values.Offers and indicated traded levels were reported between$1,320-1,350/mt CFR Istanbul plus 3% duty “with most dealsdone at the lower end of the range,” said one trader, adding heexpected prices to be on a gradual decline until next week. Onthe production side, Sabic has delayed the lifting of a forcemajeure on PP supplies from its Geleen production unit in theNetherlands, a source confirmed, adding the 550,000 mt/yearunit is running at full capacity. LyondellBasell has resumedoperations and deliveries from its 400,000 mt/year Plock PPproduction unit joint venture in Poland, but has maintainedthe force majeure imposed on PP supplies, a company sourcesaid last week.

United States

Domestic PP prices moved lower this week, tracing themonomer contract that shed 8 cents/lb in June. US Junepropylene contracts initially settled 8 cents/lb lower lastweek, bringing polymer-grade propylene contracts to 55.50cents/lb and June chemical-grade propylene to 54 cents/lb,sources told Platts. Following the decrease, participantspegged domestic homo-injection prices at 65 cents/lbdelivered while co-polymer was at 67 cents/lb delivered.Random copolymer was talked higher at near 70 cents/lbdelivered this week. Sources characterized domestic demandas healthy this week. Many participants had run throughinventories and were looking to rebuild. “Orders are pickingup in all segments,” said one seller. Meanwhile export valueswere mostly stable this week as sources suggested the marketwas still catching up after sellers dropped prices ahead of thefall in the US monomer contract. Prices were still workableinto some parts of Latin America but US prices were still toohigh to work to other regions. The homo injection price wasassessed this week at $1,234-1256/mt FAS Houston whilecopolymer was at $1,300-1,322/mt FAS Houston.

Asia

Prices slipped $20/mt in China/Northeast Asia from a weekago, dipping $10/mt in Southeast Asia and $5/mt in theIndian subcontinent. Except for India where tradingvolumes have been relatively stable, demand continued tosuffer in China and Southeast Asia as converters and tradersde-stocked amid worries about the fragile state of the globalfinancial markets and economies. Global headlines featuringthe term “double-dip recession” put market participants in astate of unease, also shaking up global consumer confidence.Market participants were also expecting a boost in China’sPP production within weeks when the state-owned Sinopecbrings online a new PP plant in Zhenhai in Zhejiangprovince. Built by subsidiary Sinopec Zhenhai Refining &Chemical Co., the unit will be able to turn out 300,000mt/year of the plastic resin. Borouge’s 800,000 mt/year PPplant in Ruwais, Abu Dhabi, is expected to begin test runsbetween July and August. Borouge plans to sell about 40% ofthe plant’s output to Asia. On Wednesday, raffia offers at



$1,220-1,230/mt CFR China had become commonplace andattracted no buyers. Buying interest dropped to $1,070-1,080/mt at best. Southeast Asia’s raffia market centeredaround $1,230/mt CFR. India’s prices were supported bydemand for raffia bags for wheat crops, sparked by a shortageof jute and jute bags. IPP and BOPP commanded a $55/mtpremium over raffia in China, with the premiums slightlylower at $45/mt in SE Asia and the Indian subcontinent.Block copol fetched a $140/mt premium over raffia in China,with premiums seen at $130/mt and $125/mt in SE Asia andthe Indian subcontinent, respectively. Propylene closedWednesday at $1,065/mt FOB Korea and $1,100/mt CFRChina, down $20/mt over the past week. Raffia PP marginswere negative by $50/mt Wednesday, based on a monomer-to-polymer conversion cost of $150/mt. To break even, a PPproducer in Asia would have needed to price its raffia cargoesat at least $1,250/mt CFR China, or $150/mt above the priceof propylene on a CFR China basis.

Latin America

Some buyers in Paraguay said they were waiting this weekfor the Brazilian offers for June purchase. The Brazilianpolypropylene producer Braskem said resin offer prices forJune to Mercosur went down $100/mt. Following the offerprice reduction, PP offers from Brazil to Argentina wereheard at $1,800-1,900/mt CFR homo raffia, injection andfilm, $1,900-2,000/mt CFR for co-polymer impact and at$1,970-2,070/mt CFR for random. June Brazilian PP offers toUruguay, Paraguay and Bolivia were heard at $1,700-1,800/mt CFR for homo raffia, injection and film and at$1,800-1,900/mt CFR for random. For the Brazilian domesticmarket, Braskem announced flat polypropylene offers inJune related to May, and they were heard at Reals 4,200/mtCIF for homo raffia, Reals 4,400/mt CIF for homo film andinjection and at Reals 4,500/mt CIF for co-polymer. JuneBrazilian offers to Peru dropped $100/mt, said a source atBraskem this week. After the offer price reduction, Brazil wasoffering PP in Peru at $1,430-1,500/mt CFR for homo film,injection and raffia, $1,480-1,550/mt CFR for co-polymerimpact and at $1,530-1,600/mt CFR for random. A buyer inPeru said Colombia started the month with similar offers at$1,510/mt CFR for homo, $1,640/mt for co-polymer and at$1,580/mt CFR for co-polymer impact. In Peru the sellerssaid demand is very slow at the moment due to the fact thatthe buyers should be waiting for another drop in prices.USimports to Peru were heard at $1,430-1,440/mt CFR.

Polystyrene

Europe

Following the settlement of the NWE styrene barge contract ata decline of Eur73/mt ($87/mt) from May, producers weremixed in their responses. BASF was the only one to officiallyannounce its pricing intentions this month, signaling that itwould lower its June-delivered general purpose polystyreneprice by Eur35/mt. Other producers, however, said they did not

share this view of the market, which continued to befundamentally tight and had emerged from planned andunplanned shutdowns during May. While nearly all plantswere reported to be producing at the highest possible rates,Dow was not available to confirm if its Schkopau, Germany sitehad returned to production after a maintenance outage whichwas due to conclude Tuesday. Despite the higher productionrates, producers said they still expected to be sold out aroundmid-month. This was due principally to the lack of importedmaterial in the continental market but also because June iseffectively the peak month for polystyrene demand in theEuropean calendar. Orders for extruded polystyrene, used forinsulation in the construction industry, were particularlystrong, several sources noted with demand even in southernand eastern Europe showing an improvement. The same wastrue of expanded polystyrene, sources said. With the weak eurocontinuing to fend off imports from Asia, producers were facingoverwhelming demand and thus able to negotiate forcontinuing higher prices. Under recent European Uniondirectives, newly built houses must have ever-increasingamounts of insulation. With only about 10% of the continent’shousing stock already insulated, sellers of both XPS and EPSexpect demand to continue organically in both the short andlong term. While one producer reported settling some businessat a decrease of Eur35/mt compared to last month, others saidthey saw the likely outcome of monthly negotiations atbetween minus Eur30/mt an Eur40/mt. However, otherproducers said they would try to maintain prices as close to arollover price as possible. “Our customers don’t want a decreaseyet, because they are still passing on increases to theircustomers,” one said. Another said customers were alreadytaking material at a rollover price and saw no need to go down.However, buyers saw the price proposal as a signal to negotiatelower prices. While none were aiming for the full Eur73/mt,one converter said it would hold out for a Eur50/mt fall, addingraw material fluctuations had distorted the true market value. Asecond said he expected to end with a decrease of Eur40/mt.Considering the information received, the FD NWE market wasassessed down a further Eur10/mt, making a total decline ofEur25/mt from May. In the spot market, traders reported some“aggressive sellers” offering European-produced material as lowas Eur1,200/mt FD Med. At the same time, Asian material wasreported landing in Turkey as cheap as $1,300/mt excluding6.5% duty. Considering the fall in SM spot prices and thisinformation, the spot market was assessed Eur30/mt lower,pending more confirmations. EPS market sources, meanwhile,said they had been able to hold on to a rollover or a “strongrollover” in some cases, which translated into a Eur10-20/mtincrease. Outright prices were reported in line with last week’sassessment, which remained unchanged.

United States

The US polystyrene price was assessed lower again this weekas feedstock styrene prices continue to fall. “We’ve seen areduction [in prices],” one source said. “More in crystal thanHIPS. The prices have fallen 5 to 6 cents for crystal, butmaybe 3 cents for HIPS.” High butadiene prices continued to



support a larger than normal high-impact premium overgeneral purpose, sources said. “The delta is up to about 7cents,” a source said. The general purpose price this weekwas assessed at $1,450/mt, down $180 from last week. Thehigh-impact price was assessed at $1,605/mt FOB USG,down $135 from last week. The delivered price for generalpurpose material fell to 67 cents/lb, while the high-impactprice was at 74 cents/lb. The primary cause of the price cutwas falling styrene prices. The US styrene price was assessedthis week just above 50 cents/lb, down more than 10 centsfrom a month ago. Sources said there was a chance the pricecould fall even further, if demand from Europe is unable tosustain a potential arbitrage opportunity from the US.

Asia

GPPS: Asian prices have come under renewed downwardpressure on delayed re-stocking by traders and end-users as anuncertain outlook over the global economic recoveryshadowed market sentiment. Asian prices ended lower, losing$10/mt to rest at $1,195/mt in line with weaker feedstockstyrene prices, which softened by $14.70/mt after averaging$1,069.70/mt CFR China over June 3-9 versus $1,084.40/mtthe week earlier. Buyers were maintaining a wait-and-seeattitude in anticipation of prices trending down over June andJuly. Kumho and Hong Kong-based traders were maintainingoffers at $1,280/mt CFR China/Hong Kong (including the$12/mt terminal-handling charge), although buyers were notkeen on spot cargoes. Converters have started cuttingpurchasing volumes in anticipation of reduced export orders,and end-users are limiting their requirements to contractcargoes, as the total demand for their products is slowing. InSoutheast Asia, Denka was offering H2 June-delivery cargoes at$1,300/mt, although no bids or buying interest were reportedfor the spot cargoes. In the domestic Chinese market, 30-50 mtparcels were traded between Yuan 9,800-10,000/mt ($1,152-1,175/mt import-parity basis) over the week. Run rates byAsian producers continue to be maintained at 70-80% ofcapacity, although rate cuts are anticipated if demand does notimprove by the end of June. HIPS: Prices in both Northeastand Southeast Asia fell by $5/mt to settle at $1,320/mtWednesday. Buying interest for HIPS continued to be dismaleven as lower offers of $1,388/mt CFR China/Hong Kong(excluding the $12/mt THC) were unsuccessful in attractingfirm bids or buying indications. Following the recent upheavalresulting from the eurodebt crisis, concerns abound on newsthat China’s economic growth may slip to between 10-11% inthe second quarter as industrial production and investmentexpanded at a slower-than-expected pace. As converters havestarted cutting buying volumes in anticipation of reducedorders, and with HIPS being offering in the domestic Chinesemarket at Yuan 11,200-11,300/mt ($1,316-1,328/mt import-parity basis), end-users were heard preferring to buy smaller30-50 mt cargoes on a hand-to-mouth basis. Traders,meanwhile, have abstained from further restocking of cargoesat current offer prices as it is not commercially viable topurchase higher price CFR China cargoes and resell thembased on current domestic prices.

Acrylonitrile Butadiene Styrene

Europe

Acrylonitrile-butadiene-styrene market sources in Europe saidthey continued to see prices flat in June compared to May asfalling styrene and acrylonitrile prices were offset by a forecastincrease for third quarter butadiene. At the same time, thecontinued absence of imported material from Asia meant thatthere was no pressure for producers to lose margin and reduceprices. “There is so little material available that producers cankeep their prices,” one buyer said, adding that he had beenbuying at a rollover from May. One producer echoed thesentiment saying that customers who had pushed for areduction had done so with little conviction. Looking into thethird quarter, despite last week’s fall in the butadiene spot priceas units returned from outages, sources said they would expecta third quarter settlement between Eur1,400-Eur1,450/mt FDNWE ($1,680-$1,740/mt) compared to the second quarterfigure of Eur1,275/mt FD NWE. At the same time, one sourcesaid he forecast styrene monomer would rebound next month.Finally, acrylonitrile was expected to fall further in the comingweeks, sources said, while the European price was still about$85/mt cheaper than the comparative Far East price. However,ABS pricing in Asia was seen moving lower this week, and theassessed mid-point of $1,880/mt CFR China was close to a levelwhere imports would be viable, one source said, calculating theequivalent FD NWE price at around Eur1,750/mt. “It couldarrive competitively but there is no margin for the exporter,”he said. The risk factor would be heightened by continuedvolatility in the euro exchange rate. In fact, Asian exports werestill far more likely to end up in the US, or other dollar-denominated markets before Europe, he added. With marketplayers seeing the contract price at a rollover, the assessmentwas unchanged this week. The spot market was assessed down,however, pulled by the lower Asian assessments.

United States

The US ABS price fell slightly this week as two of the threemajor feedstocks fell. But the price remained well above$1/lb as butadiene remained tight. The ABS price wasassessed at 113 cents/lb this week, down 3 cents from lastweek. The US styrene price fell into the mid-50s cents/lb,softened by a drop in benzene and ethylene spot values. Thestyrene price has fallen more than 10 cents during the pastmonth. There also was some slight softening in the ACNprice, though ACN supplies were expected to remain tightthrough the end of July and perhaps into August. ABS wasable to get ample support from butadiene. A shortage ofcrude C4, as well as the inability to unload some importedbutadiene, kept butadiene supplies tight, sources said.

Asia

Asia’s acrylonitrile-butadiene-styrene prices have come underrenewed downward pressure on delayed re-stocking by tradersand end-users as the uncertain outlook over the globaleconomic recovery shadows market sentiment. Both CFRChina and CFR Southeast Asia prices headed south, losing



$15/mt on the week to rest at $1,880/mt on weaker feedstockprices. According to a South Korean producer, sales volumes inJune slipped by as much as 30% from levels in May, asconverters have started cutting purchasing volumes inanticipation of reduced export orders. Meanwhile, with ABS inthe domestic Chinese market being offered at Yuan 15,600-15,800/mt ($1,833-1,856/mt import-parity basis), end-userswere heard buying 50-100 mt cargoes on a hand-to-mouthbasis. Market participants continued to remain on the sidelines,in anticipation of prices trending down over June and July.Offers from producers and traders were heard at $1,938/mt CFRChina/Hong Kong (excluding the $12/mt terminal-handlingcharge), but buyers were not heard to be interested in steppinginto the market. A Korean producer said that under thecircumstances it remained unviable for resellers to purchaseCFR China cargoes and resell them under current domesticprices. End-users are limiting their requirements to contractualvolumes, with very limited interest seen for spot cargoes, as thetotal demand for their products is slowing. Market participantspointed to the volatile feedstock markets. Main feedstockstyrene, which makes up 60% of ABS costs, continued to softenby $14.70/mt after averaging $1,069.70/mt CFR China overJune 3-9 versus $1,084.40/mt the week earlier. Acrylonitrile,which makes up 25% of ABS costs, fell by $25/mt at $2,425/mtCFR Far East Asia on June 8. Butadiene, which constitutes 15%of ABS costs, fell $31 to $2,049/mt CFR China on June 4.Taking a weighted average of all three key feedstocks, andfactoring in a minimum conversion cost of $220/mt, the break-even cost was calculated at $1,775/mt versus $1,795/mt lastweek. While ABS was assessed $15/mt lower at $1,880/mt, themargin widened by $5/mt to $105/mt this week.

Polyethylene Terephthalate

Europe

Demand for polyethylene terephthalate in the UK was holdingfirm in contrast to the rest of Northwest Europe this week,where less favourable spring weather conditions have seenconsumption fall short of expectations, sources said Tuesday.“UK resin demand is holding up compared to other markets,there has been better weather there. It’s worse in Germany andEastern Europe, even in Switzerland to a certain extent,” aproducer said. “There is a lot of stockpiling in Europe, peopleare holding back at the moment. Benelux starts its summerbreak in July, and with a bit more heat we could see demandpick up for another month or so...we do expect marginretention at the least.” A UK consumer agreed with thesentiment, saying that market conditions had been quieter inmainland Europe. He added that end-user demand in the UKwas now increasing as the weather improved, although up untilrecently it had been “somewhat disappointing”. “We expect abusy month ahead. The market has been variable on the quietside...the first sign of prices falling came from the mainland,and people there are trying to be hopeful and prevent the samefrom happening in the UK,” he said. “In April the juice marketwas very quiet. Now it has picked up and we expect to be

above budget in June. I am hoping for a fall in the June PETcontract price.” UK spot prices were meanwhile said to bearound or just below GBP1,000/mt ($1,458/mt) FD UK, withthe May net contract price understood to have been settled atthe same level. This contrasted sharply to trader sentiment inNWE, with one source saying they were expecting June to be “aquiet month in general” as spot reports slipped belowEur1,200/mt($1,445/mt) FD NWE to a range of Eur1,150-1,180/mt. “Customers are on the sidelines analysing their stocksituation. Some feel the price will go down, others say it is justa quiet period and that customers will soon return,” the tradersaid. “Antidumping has not had an impact for the timebeing...It has been a week of rumors. Customers are looking topush down prices and demand is a little quiet at the moment.We will have to wait and see what happens next month.” Asecond trader agreed with the lower price indication, sayingthat some Eastern European producers were “even looking atEur1,120-1,130/mt FD NWE.” “The range is difficult to define,but I would say around Eur1,150-1,180/mt FD NWE...the gapwas quite big [between the contract and spot price] in May, butnow it is narrowing,” the source said. “Demand is not where itshould be. People expected the market to be short as a result ofantidumping, but it has been too cold so far [to encouragedemand]. There may be some impact in July and from theWorld Cup, especially if we have temperatures like 30-35degrees, as we did during the last one.” This suggested a thirdconsecutive week of falls from a May high of Eur1,260/mt FDNWE, with a nine-day turnaround at Indorama’s PET plantfrom Thursday unlikely to impact significantly on prices. Asource at La Seda de Barcelona said the second line at its El Pratde Llobregat facility would start up Wednesday, with all plantsrunning at full capacity. Meanwhile, producers were expectingJune PET contracts to settle at a rollover to May, with the netcontract price reported around Eur1,170-1,230/mt FD NWE.“Raw materials have settled down representing a drop-off ofabout Eur30/mt in PET. Our aspirations were for a Eur20/mtincrease, but it’s now a difficult exercise to get any increase atall,” a producer said. “We should be happy with a rolloversituation...we already achieved some increases before the rawssettled, so there is some arm-wrestling starting to happen.Customers never expected month-on-month increases and nowthey want something back.” He added sellers need to “stepcautiously, [the] tide could turn.” “Soft drink demand hasimproved a little with [European] holidays, but supermarketsare sitting on a lot of preform stock, and not turning over,” hesaid. A second producer said the market was unlikely to see anyimport material in the coming month but added the marketwas tight with customers “trying to find alternative sources.”“We will improve our margins [in June]. We are sold out inmost plants...the only one not yet sold out is Italy. It will be arollover for June, which will cover the margin increase,” hesaid. In production news, Lotte Chemical UK declared forcemajeure at its 500,000 mt/year Wilton PTA plant on June 3,with the outage expected to last 7-10 days and result in a lossof 15,000 mt of material, according to a company source. Headded that the outage was expected to impact on Europe, withLotte UK unable to offer its usual volumes for the spot market.



US

Domestic PET prices in the US were already down 2 cents/lb inJune from Eastman and Wellman announcements, butparticipants believed contracts would be down more than thatgiven an estimated 4.8 cents/lb decrease in costs. June’s PXcontract had not yet settled but if the US follows Asia, thecontract would decrease 5.44 cents/lb. MEG contracts werealready concluded down 5 cents/lb in June. Producers werefighting to gain margin in June by cutting resin prices less thanfeedstock drops, but it was questionable whether this strategywould work. Demand was said to be firm from bottlerscontinuing to gear up for the summer beverage season. Therewas also a reported uptick in beverage demand already fromthe single serve market. Supply, however, was more than ampledespite the lack of spot imports. Imports were heard to besupplanted by increased domestic production as AlphaPETstarted up the second half of its 430 kt/year PET plant inDecatur, Alabama, earlier in May. One importer believed theAlphaPET’s plant would “effectively kill the import trade.”Import offers were talked at 62 cents/lb DDP West Coast,which, assuming the cargo arrives in June would be on parwith some medium sized domestic contracts. A more likelyscenario was that imports would not arrive until July and noconverter wanted to take a chance on imports so far out,considering domestic prices could fall again next month. MEGcontracts already had pressure to fall following the $120/mtdecrease in Sabic’s Asia Contract Price nomination. “Converterswill say, come back to me in 5 weeks and ask me if I want tobuy at the price you are offering today,” a trader said. “No oneknows what the price (domestic) will be then,” the sourceadded,”and no imports can get done.”

Asia

Northeast Asian prices saw another week of decline on bearishsentiments on crude oil price fluctuations and continuedconcerns over the eurozone debt problem. Prices on a FOBNortheast Asia basis fell $20/mt on the week to $1,180/mt,

while FOB Southeast Asia prices remained stable at $1,230/mt.Demand for Southeast Asian parcels was stronger as South Asiaexperiences an unusually hot summer. PET bottle chips werestrong in North Africa, where market sources say demand couldbe pushed up by the hot season and the Fifa World Cup beingheld in Africa next month. “Most producers in the region arenot in a hurry to sell now,” explained a Southeast Asianproducer. A deal was heard concluded at $1,230/mt FOBMalaysia to the Middle East for a 200 mt cargo. AnotherSoutheast Asian producer even raised its offer price by $10/mton the week and managed to sell parcels to South Asia at$1,240/mt FOB Thailand. Further east, PET bottle chip pricescould not hold as well as sellers had expected from last week.This was due to depressed buying sentiment that carried overfrom last week on weak crude prices late last week to earlyweek. Despite the seasonal demand period, buyers were alsotracking feedstock prices, which have been on a steady declinein recent weeks. This is in line with the lull in the polyestermarket that shares the same feedstocks as PET bottle chips.Upstream, feedstock PTA was down $28/mt on the week to$830/mt Wednesday and monoethylene glycol was at $708/mt,down $30/mt. This forced producers to lower prices as theyhope to cash in before the peak season ends after June. Lastweek, the European Commission announced prohibitive dutieson PET bottle chip imports from the United Arab Emirates,Pakistan and Iran. Parcels from these countries are slapped withcountervailing duties of Eur42.34/mt, Eur83.64/mt andEur142.97/mt, respectively. UAE-origin cargoes attract anadditional antidumping duty of Eur54.80/mt, bringing totalduties to Eur97.14/mt. The tariffs were designed to preventsellers from these countries from underselling into the EU.However, these duties did not excite Asian producers. “It wouldhave been helpful for us if it was introduced in April,” a SouthKorean producer said. The euro slid further against the USdollar this week, making arbitrage between Asia and Europe lessattractive. In Northwestern Europe, PET bottle grade was lastassessed at Eur1,225/mt FD NWE ($1,466/mt).



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Platts Global Ethylene Prices ($/mt)



($/mt)

700

1075

1450

1825

2200

09-Jun 14-May 21-Apr 26-Mar 03-Mar 04-Feb 12-Jan

CFR NE AsiaCIF NWE EthyleneSpot Ethylene FD USGC

US (¢/lb)

Spot Friday

FOB USG A/F* 37.00-38.00

Fiber Grade Monthly Contract Price (Jun ): 40.00-41.00 FOB USG

Asia ($/mt)

Spot Friday Weekly Average

CFR China 726-728 740.2-742.2CFR Taiwan 726-728 –CFR SE Asia 726-728 (1) –

Average Monthly Contract Price (May) – CFR Asia:1050MEG CP Nomination (Jun) – CFR Asia: 960-970

(1) CFR SE Asia = CFR Indonesia.Note: *A/F denotes anti-freeze grade Asian ethylene glycolassessments are basis L/C 90 days.

Polymer Feedstocks – Butadiene

Europe

Spot Friday

FD NWE (Eur/mt) 1670-1680FOB Rdam ($/mt) 2048-2057

Quaterly Contract Price (Q2) 1275-1275 (Eur/mt)Ineos Olefins Monthly Contract Price Ex-Works:1400-1400 (Eur/mt)

US (¢/lb)

Spot Friday

CIF USG 104.00-106.00

Monthly Contract Price (Jun ) 92-92

Asia ($/mt)

Spot Friday

FOB Korea 2038-2040CFR Taiwan 2060-2062CFR SE Asia 2048-2050 (1)FOB Japan 2038-2040CFR China 2048-2050

(1) CFR SE Asia = CFR Indonesia. *A/F denotes anti-freeze grade.

Polymer Feedstocks – Ethylene Glycol Assessments (cont...)

Notes: All olefin prices reflect assessments at close of previous Friday.

Polymer Feedstocks – Ethylene

Europe


FD NWE (Eur/mt) 913-917 943.3-948.0CIF NWE ($/mt) 1064-1068 1118.5-1127.0CIF MED ($/mt) 1064-1068 –

Monthly Contract Price (—-): 970-970 FD NWE (Eur/mt)Quarterly Contract Price (Q2): NA-NA FD NWE (Eur/mt)

US (¢/lb)


FD USG 32.500-33.000 34.469-34.906

Posted Contract Price (Jun ): NA-NA DeliveredNet Contract Price (Jun ): NA-NA Delivered

Asia ($/mt)


FOB Korea 920-922 –CFR SE Asia 900-902 957.4-959.4CFR NE Asia 930-932 963.4-965.4

Asian ethylene spot assessments reflect LC 0-30 days. CFR SEA = CFR Indonesia/Thailand.

Polymer Feedstocks – Propylene

Europe (Eur/mt)

Poly Grade Spot Friday Weekly Average

FD NWE 990-1000 997.5-1007.5CIF NWE 950-960 968.8-978.8

Chem Grade Spot Friday Weekly Average

FD NWE 990-1000 –CIF NWE 900-910 –

Poly Grade Monthly Contract Price (JUN): 1000-1000Poly Grade Quarterly Contract Price (—-): NA-NA

US (¢/lb)


dlvd USG dlvd USG

Ref Grade 37.875-38.125 37.875-38.125Poly Grade 54.875-55.125 –Chem Grade 53.375-53.625 –

Poly Grade Contract Price (Jun ): 55.500-55.500 DeliveredChem Grade Contract Price (Jun ): 54.000-54.000 Delivered

Asia ($/mt)


FOB Korea 1109-1111 1079.0-1081.0CFR Taiwan 1144-1146 –CFR SE Asia 1124-1126 –FOB Japan 1109-1111 –CFR China 1144-1146 –

Asian ethylene spot assessments reflect LC 0-30 days. CFR SEA = CFR Indonesia/Thailand.

Polymer Feedstocks – Ethylene Glycol Assessments

Europe

Spot Friday

FD NWE T2 (Eur/mt) 770-790CIF NWE T2 ($/mt) 853-877

Monthly Contract Price (Jun ) – (Eur/mt) 820-820

POLYMER FEEDSTOCKS: OLEFINS



Ethylene

Europe

European spot ethylene values were assessed lower Friday atEur915/mt ($1,099/mt) FD NWE, with recent urgency tosecure prompt volumes no longer evident in the market asavailability has improved, market sources said. Crackerreliability issues in the region have mostly been resolved andwith that the need to cover prompt shorts has diminished,the sources said. There was modest incremental buyinginterest in the market for June, although buyers appeared tobe hesitant to commit this week. Some selling interest forJune molecules was present in the market but it has, so far,failed to attract incremental buyers. The market has beenseverely backwardated of late, but with improved availabilitysome steam has begun to come off the prompt market,flattening the backwardation. Spot values were heard at aEur900-930/mt FD NWE bid-offer range through Friday.Ethylene producers said that, while availability hasimproved, core contractual demand remains healthy,supporting near maximum utilization rates at steam crackers.“The demand is holding, we are running at maximum rates,even though availability has improved,” an ethyleneproducer said. “We are not in a hurry to sell at lower prices,we are not pushing the volume out, we would still prefer toadjust the output down by 1%,” a second ethylene sellersaid. Ethylene buyers agreed that, while the market has nottilted in balance as yet and is not overwhelmingly long,availability has improved. With healthy contract and spotcracker margins and a better-balanced market, a prompttonne commands less of a premium now. Platts spot crackermargins were assessed at Eur164/mt Thursday, while contractcracker margins for June have so far averaged Eur187/mt.Ethylene buyers have also said there has been some sellinginterest from the Middle East and Iran in the market for mid-June loading. Coastal ethylene values have fallenprominently as well Friday to $1,066/mt CIF NWE, impactedby lower bids in Europe and weaker Asia. In Asia, ethylenevalues continued to descend Friday. The prices basis CFR SEAcollapsed $114/mt on the week Friday to settle at $901/mt.Market sentiment remained weak throughout the week amidrising supplies from Middle East countries, such as Iran,Qatar and the United Arab Emirates. In European productionnews, Dow Europe’s steam cracker at Bohlen, Germany hasrestarted after a maintenance outage, a company source said.“The cracker has restarted mid-week. It is producing on-specethylene. It is quickly ramping up,” he said. In upstreamnews, the spot price of delivered North Sea propane cargoeshas started to approach parity with the delivered price ofnaphtha, according to industry sources. According to sources,the current strength of North Sea propane is due to acombination of fairly tight availability, exports being movedout of the area and healthy non-petchem buying interest.Any surplus North Sea propane during the summer monthsis traditionally used as an alternative to naphtha bypetrochemicals but at a price discount equivalent toapproximately 90% of the CIF naphtha price. The strength of

propane in early June pushed the price ratio quickly up to alast published level of 97.4%.

United States

Spot ethylene values in the US continued to slide this week,falling to an 8-month low according to Platts data onimproved supply. Early week activity was thin howeverprices dropped Thursday as spot ethylene traded three times.June was heard traded at 35 cents/lb MtB Wms andconsequently at 34.50 cents/lb MtB Wms. The market wasbackwardated into July and late in the day, sources reporteda July deal at 32.875 cents/lb MtB Wms. Friday morningJune was seen bid at 31 cents/lb MtB Wms while July wasseen offered at 32.875 cents/lb MtB Wms against bids at32.50 cents/lb MtB Wms. At market close Friday, two Julydeals were heard at 32.50 cents/lb MtB Wms. Price erosionwas not confined strictly to the spot market though as MayUS ethylene contracts settled 7.75 cents lower this week at44.75 cents/lb. The April contract was at 52.50 cents/lb.Despite the falling prices though, steam cracker operatorswere still enjoying decent margins from ethane and E/P mixat 9.35 and 12.88 cents/lb, respectively. In production, Dowwas expected to restart its 1.1 billion lbs/year LHC 2 steamcracker at Plaquemine, Louisiana, in mid-June, sources said.

Latin America

June ethylene contracts for the Brazilian domestic market saw adecrease of 8% to $1,215/mt FOB. In Reals, the CP in Brazil fell5%. Usually, Brazilian ethylene contract follows the Europeanprice movement with a month lag. In order to be morecompetitive in the international market, polyethylene Brazilianoffers for the Mercosur (Paraguay and Uruguay) dropped $50 inJune, said a source at Braskem this week. June Brazilian PEoffers to Paraguay and Uruguay were heard this week at $1,700-1,750/mt CFR butene, $1,710-1,760/mt CFR hexene, $1,750-1,800/mt CFR for LDPE film and $1,700-1,750/mt CFR forHDPE blowmolding, film and injection. LLDPE and HDPEBrazilian offers to Chile went down $100-120/mt to $1,500-1,550/mt CFR for butene, $1,550-1,600/mt CFR hexene and at$1,500-1,550/mt CFR for HDPE film, injection andblowmolding. For Argentina, PE Brazilian offers were at thesame levels compared to May. “We are going to try to work flatprices in Argentina at the beginning of the month, but possiblywe are going to have to apply some offer price reduction aswell,” said the source. Brazilian offers to Argentina in June wereat $1,800-1,850/mt CFR butene, at $1,860-1,910/mt CFRhexene, $2,030-2,080/mt CFR for LDPE film.

Asia

NEA: The CFR Northeast Asia ethylene price benchmarkdived $89/mt on the week to settle at $931/mt, as themarket continued to be hit by heavy supplies and weak spotdemand. Traders reduced offers gradually to $950/mt CFRNEA later this week from $1,000/mt reported earlier thisweek. A 3,000 mt deal was reported to have been done at$930/mt CFR China for mid-July delivery. Due to thepersisting plunge in the Northeast Asia ethylene market on

stable naphtha feedstock prices, negative margins widenedfurther this week. Late Friday, negative NEA cracking marginswidened to minus $98.6/mt compared with minus $25.25/mtMonday, which prompted speculations that naphtha-fedsteam cracker operators will start reducing operations. Forexample, Taiwan’s Formosa is considering reducing steamcracker operations amid negative margins. No steam crackeroperators have started reducing run rates, but the speculationat least supported the NEA market just above $900/mt.However, some market sources said NEA cracker operatorsneeded to keep running at 100% capacity in June as theyalready purchased naphtha for the month. Meanwhile, theprices basis FOB Korea slid $80/mt on the week in tandemwith a falling CFR NEA market. A bid was reported at $900/mtFOB Taiwan, but the bid was rejected by producers. No dealswere reported on an FOB Korea basis this week. SEA: Theprices basis CFR SEA collapsed $114/mt on the week Friday tosettle at $901/mt. The market sentiment remained weakthroughout the week amid rising supplies from the MiddleEast, such as Iran, Qatar and the United Arab Emirates. UAE’sBorouge issued tenders to sell two spot cargoes this week. Thefirst 5,000 mt cargo is scheduled to be loaded in the middle ofJune, while the second 5,000 mt is for the end of June. Thetender was canceled Friday due to a lack of participation,which dampened the market sentiment further this week.Early Friday, a 2,500-3,500 mt spot cargo was transacted at$900/mt CFR Indonesia for any-July arrival.

Ethylene Glycol

Europe

The June NWE monoethylene glycol contract price was fullysettled at Eur820/mt ($994/mt) FD NWE this week, a decreaseof Eur36/mt on the May price of Eur856/mt, according tomarket sources. The initial settlement was confirmed by asource at producer Ineos, who said he had settled with two ofhis customers. Consumer M&G Group also later confirmedfollowing an initial agreement between Shell and consumerIndorama. By Friday BASF was understood to have alsosettled the price with a consumer, although this could not beconfirmed directly. “We settled at Eur820/mt FD NWE. Thefall was driven by Asian spot price and contractnominations,” a source at Shell said Tuesday. A consumersaid that given recent falls in the Asian markets, thesettlement seemed “on the higher side” but added that“taking into account ethylene and the exchange rate it is areasonable compromise.” “Europe is no different to the otherregions, it is not separate from the rest of the world. MEG issoft everywhere. In Europe there are a number of plannedturnarounds, but demand has taken producers by surprise, sothe market is balanced,” the source said. Another consumersaid he was trying to follow the initial settlement withanother producer, but expressed doubts for a promptagreement as the seller “thinks it’s too low a price.” In recentweeks Asian spot prices have fallen from an April high of$947/mt CFR China, to the current assessed price of

$727/mt. Buyers have pulled back on purchasing MEG as thepolyester industry enters a lull after the high demand seasonbetween March and April ahead of summer. This has seenconsumers looking to ensure parity with the Asian market,although some producers remain eager to maintain or evenimprove margins following an increase of Eur10/mt in theupstream June ethylene CP. Spot prices were understood tohave held steady over the week, with little change observedin the way of steady demand from downstream PET. A sourcesaid the truck price was “still around Eur740-750/mt FCANWE,” with levels steady due to the firm ethylenemovement. “Everything is proceeding within expectations.The CP settled down with Asia and the weak exchange rate.The market is balanced, there are some producers inshutdown, but these were planned so there should be noinfluence on the spot price,” the source said. In PET, Asianprices have fallen from an April high of $1,300/mt FOB, withthe price now assessed as low as $1,218/mt FOB NEA asbuyers seek to secure cheaper cargoes amid falling PETfeedstock prices, despite firm seasonal demand. This sawsentiment similarly weak in Europe, although the overalltightness of the market appears sufficient to maintain prices.The NWE PET market finally received clarity on the MiddleEastern antidumping issue, after the European Commissionannounced prohibitive duties on bottle-grade imports fromthe United Arab Emirates, Pakistan and Iran, according to aDG Trade release, Tuesday. An antidumping duty ofEur54.80/mt will be applied to imports from the UAE, butzero on Iran. However, countervailing duties have beenimposed on the UAE of Eur42.34/mt, Eur83.64/mt onPakistan and Eur142.97/mt on Iran. A producer saidantidumping measures would pave the way for furtherincreases in Northwest Europe, where prices have risensteadily by Eur400/mt since November 4, 2009 to a high ofEur1,260/mt FD NEW on May 5. However, on Tuesday atrader said signs of weakness were emerging, with the spotrange now seen at Eur1,180-1,230/mt FD NWE. The sourceadded it was not so much a decrease, however, but an effectof sellers “reducing stocks and supporting regular customers.”

United States

Contract prices fell 5 cents/lb and with lower costs in the USfurther cuts were possible in July. As usual, however, USprices will depend on the stability of the Asia market. Sincethere are US contracts based on the Asia Contract Price,participants kept a close watch on China to see if the spreadbetween spot and ACP widens. June ACP’s were at $960-970/mt, but the spot market in China was just under$$730/mt which was a wide enough spread to pull downcontract nominations in July and US-related contracts withthem. As MEGlobal tends to move its North Americanbenchmark in sympathy with the ACP’s, the other primarycontract mechanism was also likely to drop. MEGlobal’s JuneNorth American benchmark was at 48 cents/lb, less 15%discount for large volume buyers, putting these contracts atjust over 40 cents/lb. Spot export traders were kept on thesidelines with the arbitrage window to Asia and Europe



closed. Considering CFR China prices at about $727/mt, FOBUSG values would have to be at least $100/mt under that foran export to be viable. But at $627/mt or 28 cents/lb, it wasnot an attractive price for producers. Spot ethylene wouldhave to continue to decrease in the US for a producer to takea look at such a low price. The big action in the US was thespot railcar and truck market which for the last several weekshad seen tremendous demand from clean up efforts in theUSG from BP Macando oil spill. This demand was said tohave ended, however, and a source commented that manycars had even been turned away at the last minute whichwere then sold at distressed prices as there was a questionabout the specs of the glycol. The on-spec truck and railcarmarket was talked in the mid-40’s cents/lb. Demand from theanti-freeze segment was relatively slow as it was the off-season for blenders, but PET makers continued to run hard atabout 90% operating rates with the peak bottle makingseason still underway. There was also producer demand inthe US with MEGlobal on sales control and underturnaround in Prentiss, Canada through June.

Asia

Asian monoethylene glycol prices continued to take a beatingthis week as they dropped $18/mt from last week to end at$727/mt CFR North East Asia. Buyers have started to pull backon buying MEG as the polyester industry enters a lull after thehigh demand season between March and April ahead ofsummer. While PET bottle chips were still in good demand, thisrepresents only a small buying share in the MEG market.Buyers in China also remained cautious, tracking the local stockmarkets, which failed to rebound in tandem with other globalmarkets. The slow buying sentiment was further magnified byethylene prices that dropped $89/mt to $931/mt CFR NorthEast Asia. This means that the theoretical cost price for MEGstands at $679/mt. However, industry sources say this is notnecessarily the actual cost price due to feedstock supplied oncontract basis. High inventory in eastern Chinese tankscontinues to cast a shadow over the market there as MEGbuyers find it hard to find space until the end of June. Theother fiber intermediate purified terephthalic acid remaineddepressed after rebounding briefly Monday to $885/mt CFRChina, up $25/mt from last Friday. By Friday, PTA spot priceswere down to $857/mt CFR China. Similarly, PTA Septemberfutures on the Zhengzhou Commodity Exchange were downYuan 218/mt ($32/mt) on the week to close at Yuan 7,386/mtFriday. These movements in PTA have put further pressure onthe MEG market. On the other hand, sellers were unwilling tosettle at the constantly lowering bids, on firmer crude pricesthis week. Late week, few deals were heard as buyers and sellerswere locked in a stalemate, with offers heard at $735/mt CFRChina and bids at $720/mt CFR China. “On Friday, sellers werewilling to discuss at $730-735/mt CFR China levels, but thebids were too low,” a trader said. This week, Sinopec nominatedits June contract price at Yuan 6,500/mt, down Yuan 400/mtfrom its May settled price. The CP is usually higher than Plattsprevious month’s average prices, but Sinopec’s June CP brokethe trend. Market participants say this is likely to set the ceiling

for the coming weeks. In plant news, South Korea’s HonamPetrochemical shut its 160,000 mt/year MEG plant in Yeosu onTuesday. It kept its 250,000 mt/year MEG plant at Daesan shutlonger than its scheduled turnaround on poor margins.

Propylene

Europe

Spot free delivered propylene prices for Northwest Europeheaded further south this week as buying interest waned, withmost market sources describing their inventories and positionsas balanced. On Friday, two traders reported having done spotdeals at around Eur1,000/mt ($1,120/mt) FD NWE for polymergrade parcels in inland Europe. On the coast, one trader said hehad heard prices at around Eur950-960/mt for PGP. “Moleculesare becoming more accessible,” he added. Continued plantoutages in Germany are still impacting supply availability andmost industry players agreed that positions were “balanced toshort” inland and “balanced to long” on the coast. The spotmarket was generally quiet, with most producers saying theirproduction units are working “flat out” to fulfil theircontractual obligations and have no spare output to offer. Butthe market remains in “delicate balance” and supply couldeasily tighten again if another cracker suffered an unplannedshutdown, sources said. Demand remained healthy, althoughorders are certainly slower than what the market saw in Apriland early parts of May, according to European producers andbuyers, adding spot PGP prices are moving to slightly belowcontract levels. One seller said it was struggling to offloadmaterials in the coast and the offers received were “ridiculouslylow.” “We didn’t really get outright buyers for June PGP. CGP iseven worse, not a single buyer in Europe that we can find rightnow,” a producer said, adding that recent imports have beefedup supply and are weighing down on coastal prices. One tradersaid that imports are causing a “temporary overflow” in thecoast. A South-American olefins producer said it had sold acargo of 6,000 mt last week for early July arrival in Europe, andis also looking for buyers for another 5,000-6,000 mt. “It seemsno one wants it in Europe at the moment,” the source said, andwas looking now to buyers in Asia. A UK producer said thatany weakness in values will be gradual and temporary. “Pricesare coming off slightly but not bombing. There’s no reason forthat at all,” he said, commenting that speculators may betrying to talk down prices because of the decline in propyleneprices in Asia, the volatility in ethylene and energy values andas production capacity slowly come back on stream. OnThursday, BPRP, the German petrochemicals arm of BP, liftedthe force majeure on propylene supplies from the fluid catalyticcracker at its Rotterdam refinery in the Netherlands, a companysource said. The source added that force majeure remains inplace on supplies from the FCC at PCK Raffinerie’s plant inSchwedt, Germany, where production is currently ramping up.Force majeure was declared on propylene out of Schwedt inmid-May following a fire at the site, and also out of theRotterdam unit, which suffered a power failure. The RotterdamFCC produces almost 50,000 b/d of gasoline and around



150,000 mt/year of propylene. The Schwedt unit has aproduction capacity of 200,000 mt/year of propylene.

United States

US June propylene contracts initially settled 8 cents/lb lowerThursday, bringing June polymer grade propylene contracts to55.50 cents/lb and June chemical-grade propylene to 54cents/lb, sources told Platts. The decrease followed a previous12 cents/lb decrease in May contracts and marks a 27%decline in contract prices over the course of two months. Inspot RGP appeared to stabilize this week with several Junetrades. June traded twice midweek at 38 cents/lb MtB pipeand then again on Thursday at the same level. Spot PGP andCGP activity was limited on the week, last heard traded at 51and 49.50 cents/lb, respectively. In production, Dow wasexpected to restart its steam cracker at Plaquemine, Louisiana,in mid-June, sources said. The company has an estimated PGPcapacity of 833 million lbs/year.

Latin America

Propylene contract prices for the Brazilian domestic marketfell 12% in dollars for June to $1,149/mt FOB, said a source atBraskem. The Brazilian propylene price formula usuallyfollows the US and European contract movements with amonth lag. In May, propylene contract prices in the US wentdown 16% and in Europe down by 6%. Downstream, PPBrazilian offers to Mercosur were reduced by $100/mt forJune, said a source. “We are trying to be more competitive inthe market with the offer reduction,” said the source.Following the drop, the Brazilian PP offers to Paraguay andUruguay were heard at $1,700 1,800/mt CFR for homo film,raffia and injection, $1,800-1,900/mt CFR for co-polymerimpact and at $1,870-1,970/mt CFR for random.

Asia

Prices leaped $90/mt during the course of the week, astraders sought to cover short positions taken two to threeweeks ago when crude oil, propylene and PP prices were in asteep downturn. It also has come to light that Idemitsu wasexpected to lose about 18,000 mt of propylene productionfrom a monthlong unplanned shutdown of its steam crackerin Chiba, Japan. The steam cracker can produce 224,000mt/year of propylene from naphtha supplemented with LPG,and is to be taken offline in late June for repairs. The plantwas operating at full capacity Thursday. Through a numberof physical cargo swaps, Idemitsu has acquired enoughpropylene from its peers in Chiba to offset its productionloss. A rebound in the price of crude oil futures to over$74/barrel also fueled propylene’s increase. Three deals wereheard to have transpired Thursday. Platts was able to confirmtwo of them — H2 June done at $1,100/mt FOB Korea (L/Cat sight) 1,500 mt, between LG Chem and a Korean trader,and mid-July at $1,110/mt FOB Korea (L/C 10 days) 1,500mt, between YNCC to Korean trader. A Chinese traderreported buying an H2-June/H1-July lot Thursday at$1,120/mt CFR (L/C 30 days), but the deal could not beconfirmed. On Friday, selling interest started from $1,170-

1,180/mt CFR China, with higher-end rates closer to$1,200/mt. LG Chem had raised its selling interest to$1,150/mt FOB Korea for loading within July. Propylene’sprice increase ran counter to a $15/mt drop in polypropylenevalues. PP margins returned to negative mode after a briefsojourn into the black last week. PP margins were negative by$80/mt Friday, based on a raffia grade PP price of $1,215/mtCFR China/Northeast Asia, propylene value of $1,145/mtCFR China and a monomer-to-polymer conversion cost of$150/mt. To break even a PP producer in Asia would haveneeded to price its raffia cargoes at at least $1,295/mt CFRChina/NE Asia, or $150/mt above the price of propylene.Asia’s PP demand has been extremely lackluster, with worriesabout the health of the global economies promptingconverters and distributors to de-stock.

Butadiene

Europe

The market for butadiene and crude C4 continued to beperceived as tight in Europe as a continued demand for exportmaterial sucked out any spare product in the region. With thecontinent’s largest consuming site, Butachimie’s 325,000mt/year adiponitrile production plant in Chalampe, France stillon a maintenance outage, butadiene was longer in principle.However, sources said that they had previously adjustedvolume flows to account for the outage. During the weekLyondellBasell lifted a force majeure from supplies of butadieneout of its 80,000 mt/yr Berre, France unit, a company sourcesaid. The force majeure had been originally declared April 15.Coupled with this, Dow’s steam cracker at Bohlen, Germanywas restarted this week with the company expecting to beproducing butadiene Friday or Saturday, according to aspokesman. Also, Sabic confirmed Friday it had lifted forcemajeure on supplies of butadiene and raffinate 1 at Wilton, UK,a Sabic spokesman confirmed. However, sources continued tobemoan the amount of light cracking and the ensuing low C4yields. “There is a substantial reduction in production thisyear,” one source said. “The light feedstock cracking seasonseems to widen every year.” While light cracking is the mainreason for lower C4 production in the US, the outlook forEurope was also gloomy. “Middle East supply into Europe isincreasing,” a producer said. “They tend to crack ethane, so nocrude C4 is produced.” With more Middle East capacity due tocome on in the second half of the year, C4 customers are tryingnow to secure volumes for the future, he said. At the moment,the export market from Europe was active, sources said, drivenby continuous demand from the US and aided by a weakereuro versus the dollar. One seller reported selling anunspecified-sized parcel to a trader at a price betweenEur1,600-1,650/mt, without specifying the terms or size. WhileEuropean buyers said they were getting adequately supplied,one said he was scouring for additional volumes in order tomake spot sales. Another source said the export market wasstill firming, citing sell ideas at $2,150/mt FOB NWE. However,the bullish nature of the NWE market was also illustrated this



month by another increase in the monthly contractsettlement between Ineos Olefins and its partners includingDow. The companies agreed on a price of Eur1,400/mt FDNWE for June-delivered material, an increase of Eur50/mtcompared to May. Looking forward to third quartercontracts, sources said that discussions had not commencedyet, but the sentiment, considering the spot pricesthroughout the second quarter, would be for anotherincrease. Considering the monthly contract price, thereported trade and the return of production sites, spotbutadiene was assessed down Eur20/mt this week atEur1,670-1,680/mt FD NWE. On the export market, FOBprices were reported in a wide range, from as low as$2,000/mt to as high as $2,150/mt, with no trade reported.At the same time, considering the US is the prime exportdestination, and considering a US market between $2,250-$2,400/mt, the FOB price was assessed up $12/mt at $2,060-$2,070/mt FOB R’dam. Fluctuations in naphtha values andthe volatile exchange rate were making it harder to pinpointprices, one trader said. The same was true for crude C4 exports.While most sources reported a factor of between 1.30 and 1.33to naphtha, one seller reported doing business at a factor of1.35. With no confirmation of the trade and considering thereturn of production units in Europe, the factor was assessed at1.32 to naphtha on a CIF NWE basis. The raffinate 1 marketcontinued to show a wide disparity between southern Europe,where product was proving to be very long, and northernEurope where demand for blending into ETBE and othergasoline components was keeping demand moving. “WhileMay was long, I have been getting less calls from sellers,” onebuyer said. “We are in the middle of the gasoline season andit’s a cheap product for blending.” Indeed, one source reportedselling an unspecified-sized parcel of R-1 at a factor of 1.18 tonaphtha on a CIF NWE basis in northern Europe for deliverymid-month. At the same time, however, a southern Europeanproducer said he was selling product as low as naphtha flat ona FOB basis for export to the US. This level was also echoed bya buyer who saw the market “awash” with product. With moreEuropean crude C4 production sites coming back online thisweek, product will likely get more plentiful during the rest ofthe month. Considering the reported levels, the lengtheningmarket and the seasonal bullishness from gasoline blendingdemand, the R1 factor was assessed unchanged this week at1.13 times naphtha on a CIF NWE basis.

United States

The spot US butadiene price fell slightly this week, butremained well above the settled contract level. Spot wastalked between 103 and 110 cents/lb, with the assessment at105 cents/lb, down 3 cents from last week. Spot was 13 centsabove the June contract price, though, as supplies remainedtight. The contract was initially nominated up 7 cents byEquistar, with Exxon following with a 5-cent increase. TPCcapped the increase at 3 cents, though, with Shell following atthat same level. There appeared to be some spot relief thisweek as one of two ships unable to unload in recent weekswas able to discharge at a terminal near Baton Rouge. A

source said the material was likely to be shipped by railcar tobuyers. A second ship, though, was still looking for a homefor about 5kt of material. Sources said the material was unableto be fed into the US pipeline because of specification issues.One source said the material would likely end up in Mexico.There also was concern this week that a shortage of CrudeC4s in the US could hamper butadiene production, a sourcesaid. Regarding imports of butadiene to the US, one cargofrom Korea was heard booked, with loading in mid-June. The5kt of material was being shipped from Korea to the US onthe Norgas Alameda. That was on top of two other shipmentsfrom Korea expected to reach the US in the next coupleweeks. Two shipments from Europe also are expected.

Latin America

For the Brazilian domestic market, butadiene contract pricesincreased 6% in dollars, said a source at Braskem Friday. TheJune butadiene contract in Brazil after the price increase washeard at $2,132/mt FOB. Brazilian butadiene contract pricesfollow the US contract prices movements closely.

Asia

FOB KOREA/JAPAN: Prices basis FOB Korea/Japan dropped$32/mt. Buying appetite for spot FOB Korea/Japan cargoes isquickly disappearing amid sufficient exports from China,which is usually an active importer in the region. A FOBChina cargo was reported to have been transacted below$2,000/mt. Some Korean cargo term lifters started seekingopportunities to sell term cargoes. Early Friday, China’s ShenHua emerged trying to resell its ex-Korea term cargo (1,500mt) for June loading at $2,050/mt FOB Korea. No buyinginterests were reported at $2,050/mt FOB Korea. However,some market sources were skeptical if Shen Hua will be ableto resell the cargo under its term agreement. Meanwhile,Idemitsu’s Chiba steam cracker outage may prompt tightcrude C-4 supplies in the country. A 1,800 mt crude C-4 lot isdue to be delivered for June from Indonesia to coverIdemitsu’s supply shortfall. CFR TAIWAN/CHINA: The marketcontinued dropping amid heavy supplies in the local Chinamarket. China’s local butadiene market dropped to Yuan16,000/mt ex-tank, or at $1,973/mt on an import-paritybasis. Import demand was scarce this week as end-users inChina were able to purchase cargoes in the domestic market.However, traders’ offers were still at $2,100/mt CFRChina/Taiwan as spot availabilities in the region were ratherlimited. Traders were also reluctant to reduce offers asnegative cracking margins may prompt lower crackeroperations in the near term. Meanwhile, fixed pricediscussions in Taiwan were limited. End-users in Taiwan wereonly interested in buying on a floating price basis amidweakening market. CFR SEA: Trading activities were limitedin Southeast Asia as end-users received sufficient supplies ona term contract basis. Shell is due to deliver its term cargofrom its new 155,000 mt/year butadiene unit next week toSouth Korea’s Kumho. No fixed price discussions werereported this week, but the market dropped in tandem withfalling CFR China market.



Paraxylene

Europe

The June NWE PX contract price was fully settled at Eur835/mt($1,019/mt) FD NWE this week—a fall of Eur35/mt versus theMay CP of Eur870/mt. The initial settlement was reported byconsumer Cepsa Quimica on Wednesday morning. Thatafternoon, producer Total confirmed settling at Eur835/mt,with Lotte UK also confirming their acceptance of the initialprice Thursday. ExxonMobil were also said to have accepted theinitial price, although this could not be confirmed directly.Sources said the CP had been a compromise, with oneconsumer saying: “I wanted a price below Eur800/mt to behonest, but apparently that’s impossible for the economics ofEurope PX producers.” This followed a full settlement for theAsian CP at $940/mt (around Eur770/mt) CFR Asia. Spot PXrose by $4.50/mt this week to reflect improving globalsentiment, although the absence of solid spot indications inEurope made it difficult to ascertain a price.

United States

US PX shed $15/mt on the week as energy was pulled downby bearish economic news from Europe. Early in the week,there was a bid at Asia minus freight, but sellers refused toconsider it as a legitimate bid. Meanwhile June contractswere still being negotiated, but consumers were certain of adrop given the lower June mixed xylene contract. In May,the CP was 52.75 cents/lb ($1,163/mt). With at least an 8%discount, the net CP was around $1,069. Downstream, somePET producers already announced a 2 cents/lb decrease inJune, as they anticipated lower PX costs.

Asia

PX: Up $6 Friday to end the week at $910.50/mt FOB Koreaand $928.50/mt CFR Taiwan/China. There were morebuyers than sellers on the market as prices continued torise, and “sellers don’t want to spoil the momentum”,one trader remarked. There were no participants duringthe Platts Market on Close assessment process, but severalbids were heard post-window for CFR Taiwan, Asia-originPX. A bid for H2 June rose from $920/mt CFR to $930/mt,while an H1-July bid was at $930/mt. For the week, PXrose $15.43, or 1.7%, and hit an intra-week low of$902.50/mt CFR Wednesday as sentiments weakened afterthe PX June Asia Contract Price was settled by all threeproducers — ExxonMobil, Idemitsu Kosan and NipponOil Corp. — at $940/mt CFR Asia, down $120, or 11.3%,from May. Separately, Sinopec nominated its June CP atYuan 7,600/mt ($933/mt on an import-parity basis),down Yuan 800, or 9.5%, from May. Tuesday, two Asia-origin parcels for July arrival were heard at $915/mt CFR,and another deal was heard at $925/mt CFR Thursday. Inmarket news, Taiwan’s CPC issued a buy tender for 5,000mt of H1-July arrival PX on a floating formula. The

tender will expire on June 9. Thailand’s PTTAR alsoawarded its sell tender for 5,000 mt of July loading PX ata $16-20/mt discount to a 50% ACP/50% spot priceformula. Isomer-MX: Up $5 to close at $802/mt FOBKorea and $910/mt CFR Taiwan. There were noparticipants on the MOC, but offscreen, two offers wereheard, at $820/mt FOB Korea and CFR Taiwan. Post-MOC,a bid was heard at $800/mt FOB and it was said thatnegotiations were underway at around $810-820/mt FOB.Earlier in the day, a bonded warehouse cargo ex-Zhangjiagang was said to be offering at $820/mt,negotiable to $810/mt — but Chinese buyers felt that theprice was still too high. Chinese buyers are mainlysolvent-MX users, and solvent-MX was assessed at$795/mt CFR China this week, up more than $40 on theweek. The poor PX-MX spread continues to cast a shadowover the mixed xylene, even as supply tightens due to the



POLYMER FEEDSTOCKS: AROMATICS

Notes: All aromatics prices reflect assessments at close of previous Friday.

Polymer Feedstocks – Aromatics

Weekly Average Spot*

Styrene FOB Korea ($/mt) 1069.40-1070.40Styrene FOB Rdam ($/mt) 1164.63-1166.38Styrene FOB USG (¢/lb) 50.85-50.95

Paraxylene FOB Korea ($/mt) 903.80-904.80Paraxylene FOB Rdam ($/mt) 901.75-906.00Paraxylene FOB USG ($/mt) 893.75-898.75

Monthly Contract Price

Styrene Barge FD NWE CP (Eur/mt) (JUN ) 1072.00Styrene Truck FCA Rdam CP (Eur/mt) (JUN ) NAStyrene FOB USG (¢/lb) (JUN ) 54.50-55.50

Paraxylene CFR Asia Average (Jun) 940.00Paraxylene FD NWE (Eur/mt) (JUN ) 835.00Paraxylene FOB USG ((¢/lb) (JUN ) N/S(Q2)#

* Average prices for week ending previous Friday. # US PX CP are typically settled retroactively,prices refer to most recent settlement. To convert Cts/lb to $/mt, multiply by 22.046.

US Styrenics Prices

(¢/lb)

0

20

40

60

80

100

09-Jun 12-May 14-Apr 17-Mar 17-Feb 20-Jan

US Domestic Dlvd GPPSStyrene Spot USG

closure of arbitrage window between US and Asia. Atrader said supply is not the issue now, but demand.“Demand is extremely low, so even if supply is tight,price will not rise.” Week-on-week, isomer-MX gained$21.25, or 2.7%, with two MOC deals Tuesday at $806/mtFOB Korea for H1-July loading. Both deals were sold byKP Chemical to SK Energy. In market news, MRPL’s selltender for 10,000 mt of MX to be lifted between July 1-10was said to have been canceled as the bids failed to meetthe floor price.

Styrene

Europe

Styrene prices lost further ground this week as confidenceebbed prior to the negotiation of the June contract price.Prices were assessed down $37/mt versus last week. “There’s alot of volatility in currencies, oil and equities and if you putthose factors in...[traders] are cautious about what willhappen in the next few hours,” a net consumer said.However, despite this volatility demand was considered good.“There is plenty of stock available and buyers want to talkdown [the market] to pick up a good price. “The slide in oilhas calmed and benzene is higher. There’s a stable geo-political environment,” a net consumer said. An NWEstyrene CP barge price for June was settled at Eur1,072/mt($1,309.50/mt) FD NWE Wednesday, between Synthomerand BASF, Synthomer said. The CP represents a fall ofEur73/mt on the May CP of Eur1,145/mt.

United States

The US styrene price continued to fall this week, as thebenzene and ethylene contracts settled lower. There wereseveral deals heard done, with a parcel heading to a Mexicanbuyer, for a price pegged below 50 cents/lb. A US trader alsobought for export to Europe for a price between 50.5 and 51cents/lb. A US producer also was heard to be shippingproduct to Asia, though the price required to make shippingproduct to Asia profitable remained below US variable costs.US styrene traders could profitably move product from theUS to Europe if they are able to buy below 51 cents/lb, aproducer said Friday. With European styrene trading at$1,180/mt FOB R’dam for June, and assuming $55 to coverfreight and margin, the arb level from the US to Europe wasestimated at just above 51 cents/lb. A trade was heard donelate last week between 50.5 and 51 cents/lb. The buyerconfirmed the 5kt of material was being shipped to Europe,but did not confirm the price. The US styrene price hasfallen sharply in recent weeks, as both the US benzene andUS ethylene spot prices have dropped. The US benzenecontract for June was settled at 295 cents/gal, down 57 centsfrom May. The ethylene contract for May was settled thisweek at 44.75 cents/lb, down 7.75 cents from April. At thoselevels, variable costs to produce styrene in the US were near48 cents/lb. With the arb level near 51 cents/lb, producerswould be able to capture nearly 3 cents/lb to cover fixed

costs and margin by selling at the arb level. The arb to Asiawas trickier to make work, though, with the Julyassessment Friday at $1,090/mt CFR China. At that level,the US price would have to fall to near 46.5 cents/lb toprofitably ship from the US to Asia. The US domestic pricewas heard near 55 cents/lb this week, down a penny fromlast week. The US 3- to 30-day price was assessed at 50.75cents/lb FOB USG this week, down 1.75 cents from lastweek. The balance of June was assessed at 50.95 cents/lb,down 1.5 cents from last week.

Asia

Asian styrene monomer held steady Friday with the FOBKorea and CFR China benchmarks remaining at $1,062.50/mtand $1,082.50/mt, respectively. Over the week, however, SMcame under intense pressure from the aftereffects of theeurozone debt crisis on concerns that demand erosion couldresult from the fallout. With China’s manufacturingexpanding at a slower pace than anticipated in May, marketparticipants also took a more cautious approach. This resultedin SM prices trending down 2.92%, or $32/mt, from$1,094.50/mt FOB Korea on May 31 to Friday’s $1,062.50/mt,while domestic SM prices in China trended down from Yuan9,075/mt to Yuan 8,975/mt over the same period. In Friday’sspot market, a firm bid for an any July-loading Korean-origincargo was heard at $1,055/mt FOB Korea, while other buyingindications at $1,060/mt FOB Korea for the same laycan werealso reported. A sell idea was heard offscreen at $1,080/mtFOB Korea. In the CFR China market, buying indications wereexpressed at $1,080/mt for any July-delivery cargoes, whileselling indications were heard at $1,100/mt CFR China. Nodeals were heard by market close, however. In the CFR Chinamarket, parcels were traded unchanged over the day at Yuan8,950-9,000/mt ($1,098-1,104/mt import-parity basis) in spiteof firmer front-month crude futures, which were up$0.70/barrel on the day at $74.75/b, as main feedstockbenzene was assessed down $3/mt on the day at $815/mt FOBKorea. Buyers also pointed to the high run rates beingmaintained, which includes Tianjin Dagu’s 500,000 mt/yearplant at 85% capacity, while CSPC’s 700,000 mt/year plantwas running at full capacity. In other plant news, SinopecZhenhai Refining & Chemical Company is expected to startits 620,000 mt/year SM plant by the end of June, in line witha restart of the company’s 1 million mt/year naphtha-fedsteam cracker by mid-June. Based on an initial 50% run rate, aminimum of 25,000 mt of SM is expected to be injected intothe supply chain in July.



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Purified Terephthalic Acid

Europe

Lotte Chemical UK declared force majeure at its 500,000mt/year Wilton PTA plant this week, with the outage expectedto last 7-10 days and result in a loss of 15,000 mt of material,according to a company source. “Force majeure was declaredyesterday at the PTA plant. There was a catastrophic loss ofsteam from the steam supplier on Sunday. The primary andsecondary steam supply options were lost for 20 hours,” thesource said. “I am not sure how long [the force majeure] willlast...in the past this has taken 7-10 days. All customer volumeswill be reduced in June.” The source added that the outage wasexpected to impact on other PET producers in Europe, withLotte UK unable to offer its usual spot volumes—although theposition was “containable in relation to contract customers.”Another major PTA producer said it was already receiving moreorders as a result of the Lotte outage. Separately, Indorama wasunderstood to be in turnaround for PTA, although this was notexpected to impact the wider market due to the integratednature of the company’s production chain.

United States

June’s formula derived PTA contract was on hold for themonth’s paraxylene settlement. May’s PTA CP was at 48.49cents/lb but was likely to decrease as participants expected alower PX settlement in line with Asia and Europe. One buyerbelieved PX could fall 4 cents/lb in June, which if put throughin the PTA contract would result in about a 2.68 cents/lbdecrease in the intermediates contract. Fundamentals werebalanced in the US with no supply shortages and demandsteady from PET makers.

Asia

Asian purified terephthalic acid closed $2 lower Friday at$860/mt CFR China for Taiwan-origin cargoes. Two Taiwan-origin deals were heard traded at $855/mt and 860/mt CFR,while a Korean-origin parcel was heard traded at $840/mt CFR.PTA has seen a volatile week as prices fluctuated according tocrude, equities, and downstream polyester sales. It lost $25, or2.82%, over the week — but has managed to stage a reboundafter each plunge. Market watchers remain wary and buyershave turned cautious, unlike two months ago when traderswere just buying up any available cargoes in anticipation of aquick profit. Polyester makers said that exports are lookingincreasingly difficult in Q3 due to the eurozone debt crisis.China’s Ministry of Industry and Information Technology onThursday said April textile exports have increased 0.3% fromMarch, but the sector continues to face tremendous pressurefrom due to uncertainties in US, Japan and the EU. Theappreciating Yuan is also making Chinese exports moreexpensive, especially to the EU and Japan at a time when theeuro and the Yen are sliding. Compared with last Friday, theCFR China and CFR SEA benchmarks were unchanged.

Meanwhile, PTA feedstock paraxylene rose $15.43, or 1.7%, thisweek to close at $922.30/mt CFR Taiwan/China, $18 lower thanthe June Asia Contract Price settlement at $940/mt CFR Asia.Based on a 50% ACP+50% spot price formula, PTA makers needto break even at just $774/mt CFR China even though thecurrent spot price is well above $850/mt CFR China. Septemberfutures on the Zhengzhou Commodity Exchange fell Yuan 232,or 3%, this week, ending Friday at Yuan 7,386 per lot. CFRIndia: Up $6 to close at $878/mt as spot activities picked updue to the closure of MCC PTA India’s plant in Haldia. The



Polymer Feedstocks – Intermediates

Weekly Spot

PTA CFR China ($/mt)* 865.0-867.0PTA CFR SE Asia ($/mt) 844.0-846.0PTA CFR South Asia ($/mt) 877.0-879.0

EDC CFR FE Asia ($/mt) 485-487EDC CFR SE Asia ($/mt) 490-492EDC FOB NWE ($/mt) 480-510EDC FOB USG ($/mt) 420-430

VCM CFR FE Asia ($/mt) 798-800VCM CFR SE Asia ($/mt) 824-826VCM FOB NWE ($/mt) 730-760VCM FOB USG ($/mt) 710-720

Acrylonitrile CFR FE Asia ($/mt) 2424-2426**Acrylonitrile CFR SE Asia ($/mt) 2429-2431**Acrylonitrile CFR South Asia ($/mt) 2469-2471**Acrylonitrile FOB USG ($/mt) 2420-2430**Acrylonitrile CIF Mediterannean ($/mt) 2358-2362**

Monthly Contract Price

PTA FD NWE (Eur/mt) (NA ) NA-NAPTA Delivered USG (¢/lb) 48.48-48.50VCM Delivered USG (¢/lb)(May) 39.44-39.44

US domestic prices reflect transaction pricing for medium-sized customers. * Average prices for week ending previous Friday.** ACN prices reflect assessments at close of Tuesday

Notes: All intermediates prices reflect assessments at close of Thursday,with the exception of PTA CFR China.

POLYMER FEEDSTOCKS: INTERMEDIATES

Platts Asian PTA versus Paraxylene ($/mt)

($/mt)

800

950

1100

1250

1400

04-Jun 07-May 09-Apr 12-Mar 12-Feb 15-Jan

PTA CFR ChinaPX CFR Taiwan

800,000 mt/year No. 2 line was shut for a turnaround fromMay 23-June 8, while the 470,000 mt/year No. 1 line was shutfor a three-day maintenance over June 3-5. Traders saiddemand from India continues to grow and sellers are turningtheir attention to the region as prices are now much betterthan CFR China.

Acrylonitrile

Europe

NWE acrylonitrile prices held steady this week amid a dearthof prompt materials, with the upside capped by consumers’resistance to pay above $2,400/mt given the weakness infeedstock prices. A buyer said he’d seen an offer at this levelfor August delivery, US origin, but had turned it down as hefound the shipment date “too risky”. “Everbody’s expectingprices to go down,” he said. Another buyer said he thought$2,250-2,300/mt was a “fair” range given the weak propylenevalues, but would accept $2,400/mt for June shipment. AEuropean producer however, said he would continue to offerin the range of $2,360-2,420/mt. Several traders claimed tohave seen buying interest at $2,500/mt, but other marketsources described the level as “unsustainable” and expected asharp correction later on. “At the moment, these prices areabove the traditional cost base. This has got to correct at somepoint,” said a fiber manufacturer. Supply constraintsprompted Ineos to continue to partially run the 280,000mt/year Seal Sands ACN plant during the unit’s June 8-29turnaround, a source said Tuesday. Petkim extended theshutdown of its 90,000 mt/year ACN unit in Aliaga, Turkey, asource said Tuesday. Trading sources said LukOil has restartedthe 140,000 mt/year Saratov plant in Russia following repairwork. LukOil has yet to comment.

United States

The US ACN price shifted lower this week as falling feedstockprices pushed buyers away from the market. Sellers, though,said prices should stay near $2,500/mt for export, consideringthe current lack of supply. June and July were basically sold out,one producer said, with orders for August already coming in.Buyers, though, were hoping for prices below $2,400/mt aspropylene prices have fallen nearly 10 cents during the pasttwo weeks. Chemical-grade propylene values this week were at53.5 cents/lb, down from 62.25 cents/lb two weeks ago. The USACN price this week was assessed at $2425/mt FOB USG, down$45 from last week. The delivered price was assessed 2 centslower at 113 cents/lb. Downstream demand was expected to bestrong for a couple of months, a source said, particularly fromABS producers. However, buyers were hoping to wait for ACNprices to fall before attempting to restock, a source said.

Asia

Asian acrylonitrile prices in the Far East and Southeast Asiastarted ceding ground, with a steep backwardation expected forAugust on news that both ICC and Vinmar had resold a 5,000mt cargo to Indian acrylic fiber producers at $2,370/mt CFR

South Asia for end August delivery. CFR Far East Asia/SoutheastAsia prices fell $25/mt on the week to $2,425/mt and$2,430/mt, respectively, while CFR South Asian prices fell$25/mt to $2,470/mt. Stiff buying resistance on weakacrylonitrile-butadiene-styrene and acrylic fiber prices furthereroded structural support over the week. In line with the spotACN cargoes sold at $2,370 for end August delivery to buyers inIndia, buying indications plummeted while South Korea’sTaekwang abandoned offering its 1,000 mt cargo for Juneloading in the spot market, and the cargo was heard diverted toan existing contract customer in Korea. While spot cargoescontinued to remain tight over the remainder of June, withAsian producers such as Taiwan’s China PetrochemicalDevelopment Corp. and South Korea’s Taekwang having soldout its June cargoes. While the 5,000 mt cargo sold by ICC andVinmar for end August delivery was outside the Platts 30 dayassessment period, Asahi Kasei’s contract price nomination forJune at $2,200/mt CFR Far East Asia, plus concerns the ongoingsovereign debt crisis will affect demand for downstream ABSand acrylic fiber applications, resulting in market participantspreferring to operate at lower run rates on contractual supplies.In the domestic Chinese market, Shanghai Secco Petrochemicalwas offering spot cargoes at Yuan 20,000/mt ($2,350/mtimport-parity basis) for H2-June delivery, down Yuan 500/mtfrom its offer a week ago. Buying interest for spot cargoes wasalso dismal in line with lower domestic ABS offers at Yuan15,600-15,800/mt ($1,833-1,857/mt import-parity basis). Thisled buyers to rely on existing contract supplies, as the economicoutlook remained uncertain on news from China’s StateCouncil’s Development and Research Center that China’seconomic growth may slip to 10-11% in the second quarter asindustrial production and investment expanded at a slower-than-expected pace. In plant news, Secco shut one of two130,000 mt/year ACN lines at its plant in Caojing, Shanghai,for eight days of scheduled maintenance Tuesday. The secondline is running at full capacity, although Secco will not offerspot cargoes during the turnaround.

Ethylene Dichloride / Vinyl Chloride Monomer

Europe

EDC: The NWE market was beginning to take on a bearish feel,according to one market source this week. Little trade wasreported done and the lack of buy interest could see prices dip.“I’ve done no further trade since last week and it feels like themarket might be turning downwards,” said the source,although he added that prices hadn’t fallen yet. Elsewhere inthe chlorvinyls chain, IneosChlorVinyls announced a priceincrease of Eur25/mt ($30/mt) per dry metric tonne for Junecaustic soda business, a company statement said Tuesday. Thestatement added that a further increase—which is yet to bedetermined—will be applied July 1 for quarter 3 caustic sodabusiness. The company said the announced increase was “dueto reduced margins on the electro-chemical unit and acontinuing low stock position.” VCM: There was little changereported in the VCM market this week, as low levels of



production in PVC meant VCM producers continued to useproduct internally and restrict spot product availability. PVCproducers were bullish, with a minimum of Eur60/mttargeted as a price increase for June. One producer said: “AllPVC producers are struggling. We all have the same needs asan industry and we all face the same problems, so we mayend up with a more consistent approach to June.”

United States

The US EDC price fell this week as export demand remainedsluggish, and domestic demand was heard to be tapering off.“Not much [EDC] is moving because the Asian market hassome bearish tones,” a trading source said. The price wasassessed at $425/mt FOB USG, down $25 from last week.Also contributing to the lower price was falling ethyleneprices. The May US net ethylene contracts were settled at44.75 cents/lb, down 7.75 cents from the April contract. Thesettlement was in line with prior expectations of a 7- to 10-cent drop. The move comes as spot ethylene values were at ayear-long low. PVC operating rates above 90% during thepast month helped keep some upward pressure on VCMprices. That demand, though, was not expected to provideenough support to offset the recent drop in ethylene prices.The May US net ethylene contracts were settled down 7.75cents this week at 44.75 cents/lb. The US VCM price wasassessed flat this week at $715/mt FOB USG. The deliveredprice was at 39.44 cents/lb.

Asia

EDC: The Asian ethylene dichloride market weakened thisweek to a five-month low Thursday. Spot EDC demand isweakening as downstream VCM producers start reducing theiroperations amid bearish VCM demand for PVC production.Taiwan VCM decided to shut its 300,000 mt/year VCM plantfrom the middle of June for at least two weeks due to weakVCM demand. After a spot deal was reported done at $485/mtCFR China this week, a firm bid dropped to $450/mt CFR FarEast Asia from $500/mt the previous week. Buyers’ sentimentwas also weakened in Asia on sharply-dropping ethylenefeedstock values. The CFR Northeast Asia ethylene pricebenchmark was pegged at $961/mt Thursday, $59/mt lowerthan last week. Meanwhile, an arbitrage window from the USto Asia is still closed. The US EDC market is weakening, but ata much slower pace than Asia, and prices basis FOB USG werepegged at $450/mt. VCM: Asian vinyl chloride monomerprices dropped $21-25/mt on the week to a five-month lowThursday, pressured by weak VCM demand for PVCproduction amid weakening PVC prices. Asian PVC pricesdropped $16/mt, or 1.7%, on the week Wednesday to settle ata year-low of $949/mt CFR China. Tracking this trend, theAsian VCM market also traveled south. Thursday, a spot cargowas reported to have been transacted at $799/mt CFR China,lower than a deal done level of $805/mt CFR China earlierthis week. Prices basis CFR Southeast Asia were between $820-830/mt this week on thin trading. Some trading sources saidthe Asian VCM market is near its bottom as local PVC pricesin China have started to rebounded slightly. Ethylene-based

PVC prices rose Yuan 50/mt to Yuan 7,600/mt delivered,while carbide-based PVC prices rose Yuan 100/mt to Yuan7,350/mt delivered. China’s carbide-based PVC market isbeing lifted by firm carbide feedstock values amid risingelectricity prices in China.

Dimethyl Terephthalate

Europe

The upstream June NWE PX CP was understood to havebeen fully settled at Eur835/mt ($1,019/mt) FD NWE thisweek—a fall of Eur35/mt versus the May CP of Eur870/mt,according to market sources. Following an initial settlementreported by Cepsa Quimica Wednesday, producer Total andLotte UK confirmed their acceptance of the price, whileExxonMobil was also said to have agreed it—although thiscould not be confirmed directly. A consumer said the CPhad been a compromise, adding that the May CP ofEur870/mt FD NWE had been “no good for anyone”.“Eur835/mt was at the high end of the envelope, but withthe fluctuations in the exchange rate it was not clearwhether it would be a good price or not. It’s a matter ofcomparing [the CP] to the previous CP and exchange rate atthe time,” he said. A DMT producer said Eur835/mt wasacceptable, but added it was still on the high sideconsidering the June ACP of $940/mt (Eur770/mt) CFR Asia.DMT activity was understood to be firm, especiallycompared to 2009, although one source said volumes werestill expected to drop closer to August.

NEWS

US toluene nearly 20 cents higher

above 2009 summer blend value

Houston — US toluene's premium over blend value is nearly20 cents/lb higher so far during the 2010 driving season,compared to the same period in 2009, according to Platts data.Driving season typically runs from the beginning of May untilthe end of September, sources said. The premium for tolueneover blend value considers data from 25 trading days weretaken from May 3 to June 8 in both 2009 and 2010. So far thissummer, the higher premium was due to suppliers who wereexercising "pretty good self-control," offering well above blendvalue despite a lack of demand from the gasoline pool and noexport opportunities or chemical demand, sources said. "Noone wants to sell lower," one trader commented. Oneparticipant said he needed to sell a minimum number of barrelsin order to be coaxed into producing enough material to gointo the spot market. Still others pointed to margins thatremained positive for swing toluene disproportionation (TDP)and MSTPD units in the US, so there was still motivation formanufacturers to continue to produce material. Amanufacturing source though said, "There is a point where(toluene and mixed xylenes) will not go well above blend



value," because suppliers will start to slash rates. Currentlychemical demand was weak, given that Asian inventorieswere full, and sentiment was bearish on questions about theEuropean economy. For instance, in East China this week,toluene inventories held by traders were estimated to be at180,000 mt Monday, far above the region's normal monthlyinventory levels of 60,000-80,000 mt. Further, Japan's NipponOil Corp. Wednesday said it would maintain operating TDPrates in Mizushima below 100% indefinitely, due to weakproduction margins. Blenders meanwhile were seekingcheaper octane values in ethanol and alkylate, sources said.On June 3, US production of ethanol-blended conventionalgasoline hit yet a second all-time high for the reporting weekending May 28, according to statistics released by the USEnergy Information Administration. The US produced 4.918million b/d of conventional gasoline blended with ethanol,up from 4.757 million b/d for the week ending May 21, theEIA figures show. The previous high was for the week endingMay 14, 4.823 million b/d. On Thursday, toluene was assessed23 cents above blend value at 224.72 cents/gal. Blend value isan estimate of the price level at which toluene and mixedxylene can profitably be used to boost octane or lower RVPratings in gasoline. Since the RVP values for gasoline shiftlower in spring and summer gasoline blends -- and bothtoluene and mixed xylene have low RVP ratings -- blenddemand for both toluene and mixed xylene tend to increaseduring the spring and summer.

European MTBE Eurobob factor

drops to 2010 low of 1.03

London — The Northwest European MTBE factor versusEurobob Wednesday fell to 1.03, both its lowest point this yearand a historical low since Platts began assessing Eurobob onJuly 1, 2009. Wednesday's factor dropped below the previousrecord low of of 1.045 recorded Tuesday. Octane-booster MTBEis assessed at a factor — effectively a percentage ratio — togasoline barges, to reflect the economic advantages ofblending the component into gasoline. It can also be assessedat an outright price in dollars/mt. The factor has now dropped

around five factor points since May 28, with sources citinglackluster demand for MTBE against a glut of supply. Despitean improving blending economics picture — which wouldentice blenders to use more MTBE in their gasoline blends —there remains too much MTBE in storage and an absence ofany incremental demand from fresh tenders, sources said.Early this week market sources said that at a factor of 1.05blenders would step in and buy barrels, but as yet the markethas yet to find its floor, they said Wednesday. "[A factor of]1.05 has been the historical blend value at which buyerswould step in. Buying is lackluster because people are stillchewing through it [current over-supply]. If naphtha-gasolineweakens you'll see people buying," a trader said. "There shouldbe a blend margin but no one is in a hurry to blend it. There'sno sense in bringing it in," said one industry player. "Youwould [likely] optimize it by keeping in the Arabian Gulf or bysending it into Asia," he added. "Europe is not a big enoughmarket to take it. At a factor of 1.03-1.04, how long will it taketo create a good blend value?" asked a trader. "With alkylatetrading at a 1.22 factor above gasoline and reformate at an[approximate] $15/mt premium above gasoline, it's a questionof finding oxy [gasoline] outlets," a producer said. The problemwas that these outlets were few and far between, with little orno gasoline US-bound arbitrage opportunities, sources said."Storage tanks are full. There is no arb, and more directethanol blending in the US and the US can fulfill its owndemand [of components]. The Med is also slow. My customers[there] are not complaining anymore. Sellers are finding it[increasingly] tough," a second producer said. "Producers arestruggling. They brought more in [earlier this year]. TheVenezuela pull through on high factors attracted material [intoNWE]," the first producer said. In March Venezuela's statePDVSA tendered for a combination of April and May-loadingMTBE. According to European market sources, the tender wascomprised of two lots: for 300,000 barrels to be loaded in late-April and 200,000 barrels to be loaded in early May, 10 daysapart, equivalent to 59,000 mt. Prior to this PDVSA tendered40,000-60,000 mt of MTBE for delivery March 28-April 3,market sources reported. In addition, there was not enough ofa contango to attract storage, the first producer said.



Global Production Update

Company Location kmt/yr Product Timing Status

JG Summit Bantangas 180 PP June 7 SUNanjing Jinling Nanjing 150 PP Jun 2 OR 90%Nanjing Jinling Nanjing 150 PP Jun OR 100%Nanjing Jinling Nanjing 150 PP May 7-28 SD marginsIndian Oil Panipat 600 PP Apr-May test runsIndian Oil Panipat 600 PP Jun ave OR 65% plannedLB Plock 400 PP Jun 1 SU FM Sabic Geleen 620 PP May 26 SU FM to be lifted next weekLB Plock 400 PP May 14 SD! FMBorealis Porvoo 220 PP May 05 OR reduced - C3 shortage Dow Seadrift, TX 300 PP May 27 SU - restartedDow Seadrift, TX 300 PP Apr 6 SD! mid-May restart

TA = scheduled turnaround; SD! = unplanned shutdown; SU = startup; DB = debottlenecking; OR = operating rate Contact: +44 207 176 6264

EU carbon price to rise to Eur17.55/mt

by 2012: UK's DECCLondon — The price of carbon allowances under the EU

Emissions Trading System is expected to rise to Eur17.31/mt($20.74/mt) of CO2 equivalent by 2011 and Eur17.55/mt by2012, the UK government said Wednesday. The projections for2011 and 2012 are based on a central scenario, with a Eur8.84-21.55/mt range for 2011 and Eur8.96-21.91/mt for 2012, thedepartment of energy and climate change said in a statement.Looking further ahead, DECC said it expects the EU carbonprice to rise to Eur18.28/mt by 2015, Eur19.73/mt by 2020 andEur84.74/mt by 2030, according to its central projections. DECCsaid its projections were revised to include new information onfossil fuel prices, economic growth and changes in scope to theEU ETS. "The impact of this new information on the DECCcarbon price model has been to revise the carbon valuessignificantly downwards," said DECC in the report. Thegovernment department said one of the main challenges to themodelling is to the estimated level of emissions that would takeplace without the EU ETS. "Lower economic growth across theEU has led to lower demand for electricity and carbon-intensiveindustrial products, and therefore a lower expected level ofbusiness-as-usual emissions. This has the effect of lowering EUAprices as the amount of abatement that is required in the EUETS is reduced," said DECC. "Another significant change to themodelling has been to incorporate more detailed research intothe abatement options available in the industrial sectors coveredby the EU ETS. This research shows that there is a greater rangeof abatement options in these sectors than we have previouslyassumed, which has the effect of lowering our carbon values," itsaid. The scheme's regulator, the European Commission, hassaid it intends to reduce the overall cap on carbon emissionsunder the EU ETS using a linear annual factor of 1.74% in PhaseIII, which would reduce the cap from 1.974 billion mt/yr in2013 to 1.72 billion mt/yr by 2020. The EC has also said itintends to extend the 1.74% annual reduction into the scheme'sPhase IV period, which will run from 2021 to 2028, andbeyond. A DECC spokesman said the sharp jump in itsprojected prices between 2020 and 2030 is partly explained bythe department's use of two different models: one used for theprojections up to 2020 based on the current workings of the EUETS, and another longer term model which considers long-termemissions stabilization goals. DECC's projections for carbonprice scenarios were based on the EU's existing target to reduceeconomy-wide emissions by 20% from 1990 levels by 2020. Thefigures in the report were quoted in UK Pounds/mt of CO2e andconverted into euros. The price of EU Allowances for delivery in

December 2010 on the over-the-counter market closed atEur15.70/mt on Tuesday, and the contract was trading littlechanged at Eur15.71/mt by 12:50 BST (11:50 GMT) Wednesday.

Total, UAE's Masdar to build

world's largest solar power plant

Dubai — French oil major Total has teamed up with theAbu Dhabi Future Energy Co, or Masdar, to build the world'slargest concentrated solar power plant in the UAE capital, thefirst of its kind in the Middle East, the companies said in astatement Wednesday. Masdar appointed Total and Spain'sAbengoa Solar to build the Shams 1 solar power plant, whichthe statement said would be one of the UAE clean energycompany's flagship projects. Construction of the power plantwill begin in the third quarter of 2010 and is due to becompleted within two years. It will contribute toward AbuDhabi's target of achieving 7% renewable energy powergeneration capacity by 2020. Shams 1, to be built at MadinatZayed, some 120 km southwest of Abu Dhabi, will have acapacity of approximately 100 MW and a solar fieldconsisting of 768 parabolic trough collectors to be suppliedby Abengoa Solar. The project is registered under the UNClean Development Mechanism and is eligible for carboncredits, the statement said. The plant will displaceapproximately 175,000 mt of CO2 per year, equivalent toplanting 1.5 million trees or removing 15,000 cars from AbuDhabi's roads. Masdar will own a 60% stake in theconsortium with Total and Abengoa Solar holding 20% each.Although the UAE is a member of OPEC holdingapproximately 8% of global oil reserves, nearly allconcentrated in Abu Dhabi, and the sixth largest natural gasreserves, it has taken the lead among the region's oilproducers in developing clean energy sources to help meetrapid demand growth for energy in the seven emirates thatmake up the UAE federation. Energy demand is growing atan average 10% per year and all seven emirates are short ofnatural gas for power generation and desalination plants. TheUAE is a net importer of natural gas through the DolphinEnergy project, which supplies pipeline gas from Qatar'sNorth Field to the UAE and Oman. Masdar, which is buildingthe world's first carbon neutral city on the outskirts of AbuDhabi, is a wholly owned subsidiary of Abu Dhabi'sgovernment-owned Mubadala, which has interests rangingfrom energy to aerospace. Mubadala holds a 51% stake inDolphin Energy with partners Total and the US' Occidentalwith 24.5% each.



Volume 33 / Issue 23 / June 9, 2010PolymerscanEditorial: Sydney +61-2-9255-9842. Singapore +65-6530-6584. Tokyo +81-3-4550-8837. London +44-20-7176-6264. New York +1-212-904-3070. Houston +1-713-658-3206.Client services information: North America: 800-PLATTS8 (800-752-8878); direct: +1-212-904-3070 Europe & Middle East: +44-20-7176-6111 Asian Pacific: +65-6530-6430 Latin America: +54-11-4804-1890, E-mail: [email protected]

Copyright © 2010 The McGraw-Hill Companies. All rights reserved. No portion of this publication may be photocopied, reproduced, retransmitted, put into a computer system or otherwiseredistributed without prior written authorization from Platts. Platts is a trademark of The McGraw-Hill Companies Inc.Information has been obtained from sources believed reliable.However, because of the possibility of human or mechanical error by sources, McGraw-Hill or others, McGraw-Hill does not guarantee the accuracy, adequacy or completeness of any suchinformation and is not responsible for any errors or omissions or for results obtained from use of such information. See back of publication invoice for complete terms and conditions.

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