Polymers Can 2je6g

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[PETROCHEMICALS ]

POLYMERSCAN

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Volume 36 / Issue 6 / February 6, 2013 Americas Polymer Spot Price Assessments FAS Houston ($/mt)

US Contract US Domestic FOT Brazil* CFR Brazil dlvd railcar ($/mt) ($/mt) ($/mt) (cts/lb)

PVC SUSP 1005-1015 49.00-51.00 1079.96 -1124.04 —- 1180-1190 LDPE G-P 1543-1565 79.00-81.00 1741.16 -1785.24 1535-1545 1695-1705 LLDPE (Butene) 1521-1543 66.00-67.00 1454.64 -1476.68 1525-1535 1675-1685 HDPE Inj 1499-1521 68.00-69.00 1498.72 -1520.76 1560-1570 1675-1685 Bmldg 1466-1488 68.00-69.00 1498.72 -1520.76 1535-1545 1655-1665 Film 1510-1532 71.00-72.00 1564.84 -1586.88 1525-1535 1675-1685 Yarn —- —- —- PP Homo Inj 1642-1664 82.00-83.00 1807.28 -1829.32 1480-1490 1620-1630 Fiber —- 83.00-84.00 1829.32 -1851.36 —- —- Copol 1664-1686 —- 1520-1530 1640-1650 IPP Film BOPP PS G-P 2020-2030 111.00-113.00 2446.44 -2490.52 —- HIPS 2210-2220 122.00-124.00 2688.88 -2732.96 —- ABS Inj —- 126.00-128.00 2777.04 -2821.12 —- PET bottle grade 1719-1741# 1868-1890##

CFR PERU ($/mt)

1120-1130



1625-1635 1615-1625



1645-1655 1605-1615 1645-1655



1625-1635 —1655-1665

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. # US PET bottle grade refers to DDP US West Coast. ## US PET contract price is in $/mt.

Contents

Asian Polymer Spot Price Assessments CFR FE Asia CFR SE Asia ($/mt) ($/mt)

CFR South Asia ($/mt)

China Domestic (Yuan/mt)

PVC SUSP 1024-1026 1054-1056 1059-1061 LDPE G-P 1462-1464 1479-1481 —- LLDPE (Butene) 1479-1481 1499-1501 1479-1481 HDPE Inj 1459-1461 1494-1496 1449-1451 Bmldg 1459-1461 1494-1496 1449-1451 Film 1489-1491 1494-1496 1499-1501 Yarn 1499-1501 1504-1506 —- PP Raffia 1464-1466 1527-1529 1519-1521 PP Injection 1464-1466 1527-1529 1519-1521 Fiber —- —- Copol 1479-1481 1544-1546 1534-1536 IPP Film 1484-1486 1547-1549 1537-1539 BOPP 1474-1476 1542-1544 1532-1534 PS G-P 1859-1861 1914-1916 —- HIPS 1929-1931 1989-1991 —- EPS G-P 1859-1861* EPS F-R 1929-1931* ABS Inj 2039-2041 2049-2051 —- PET bottle grade 1584-1586 * 1574-1576 ** —-

^6890-6910 ^^6490-6510 11280-11320 10980-11020 ——11380-11420 —10780-10820 ——————-

——-

Notes: Asian PVC, 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%. ^Denotes ethylene-based production ^^Denotes carbide-based production. EPS F-R refers to fire retardant grade. *Denotes FOB North East Asia (South Korea, China, Japan) **Denotes FOB Southeast Asia (Thailand, Indonesia , Vietnam, Malaysia).

The McGraw Hill Companies

Polymers Polyvinyl Chloride Low Density Polyethylene Linear Low Density Polyethylene High-Density Polyethylene Polypropylene Polystyrene Acrylonitrile Butadiene Styrene Polyethylene Terephthalate

4 5 7 8 10 12 14 15

Polymer Feedstocks: Olefins Ethylene Ethylene Glycol Propylene Butadiene

18 19 20 22

Polymer Feedstocks: Aromatics Paraxylene Styrene

25 26

Polymer Feedstocks: Intermediates Purified Terephthalic Acid Acrylonitrile Ethylene Dichloride / Vinyl Chloride Monomer

28 29

News

30

29

Platts Polymerscan

February 6, 2013

Daily Polymer Spot Price Assessments

Thursday

Friday

Monday

Tuesday

Wednesday

Average

1469-1471 1442-1444 1461-1463 1449-1451 1450-1452

1484-1486 1454-1456 1476-1478 1457-1459 1458-1460

1484-1486 1459-1461 1476-1478 1457-1459 1458-1460

1487-1489 1462-1464 1479-1481 1459-1461 1459-1461

1489-1491 1462-1464 1479-1481 1464-1466 1464-1466

1482.60-1484.60 1455.80-1457.80 1474.20-1476.20 1457.20-1459.20 1457.80-1459.80

1345-1350 1325-1330 1245-1250

1345-1350 1325-1330 1245-1250

1345-1350 1325-1330 1245-1250

1345-1350 1325-1330 1245-1250

1320-1325 1320-1325 1225-1230

1340.00-1345.00 1324.00-1329.00 1241.00-1246.00

1325-1330 1305-1310 1225-1230

1325-1330 1305-1310 1225-1230

1325-1330 1305-1310 1225-1230

1325-1330 1305-1310 1225-1230

1300-1305 1300-1305 1205-1210

1320.00-1325.00 1304.00-1309.00 1221.00-1226.00

1544-1566 1521-1543 1642-1664 1477-1499

1544-1566 1521-1543 1642-1664 1477-1499

1544-1566 1521-1543 1642-1664 1477-1499

1555-1577 1532-1554 1642-1664 1455-1477

1543-1565 1521-1543 1642-1664 1455-1477

1546.00-1568.00 1523.20-1545.20 1642.00-1664.00 1468.20-1490.20

1467-1469 1437-1439 1459-1461 1440-1442 1441-1443

1467-1469 1442-1444 1459-1461 1440-1442 1441-1443

1470-1472 1445-1447 1462-1464 1442-1444 1442-1444

1472-1474 1445-1447 1462-1464 1447-1449 1447-1449

1465.6-1467.6 1438.80-1440.80 1457.20-1459.20 1440.20-1442.20 1440.80-1442.80

CFR FE Asia ($/mt) HDPE film LDPE LLDPE PP Raffia PP Injection FD NWE (Euro/mt) LDPE LLDPE PP Homo FCA Antwerp (Euro/mt) LDPE LLDPE PP Homo FAS Houston ($/mt) LDPE LLDPE PP Homo HDPE Blmldg

FOB Middle East Netbacks ($/mt) HDPE LDPE LLDPE PP Raffia PP Injection

1452-1454 1425-1427 1444-1446 1432-1434 1433-1435

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

Polymer Spot Freight Rates ex-Middle East ($/mt) From: To: East China South China India Southeast Asia NW Europe Turkey US Gulf Latin America

Middle East 25-100 mt 15-30 15-30 40-45 30-40 65-75 65-75 135-145 160-170

PLATTS PETCHEMS IS ON TWITTER

Middle East >100mt 10-25 10-25 35-40 25-35 60-70 60-70 130-140 155-165

FOR UP-TO-THE-MINUTE PETCHEM NEWS AND INFORMATION FROM PLATTS Follow us on twitter.com/PlattsPetchem

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

]

Metals Aluminum Tin Tin

US US Europe

Feb 05 Feb 04 Feb 01

cts/lb cts/lb $/mt

105.371 1163 25278-25392

£1 to

€1.1567

THE VALUATION HUB

Foreign exchange €1 to

$1.3535

Global LDPE Prices

Introducing: The Valuation Hub

1,700 CFR FE Asia ($/mt)

FD NWE (€/mt)

FAS Houston ($/mt)

1,600

Platts Risk Data Services now provides customers customized valuation services for companies active in energy markets. Send us your data, and we will provide independent valuations for you. This service can help clients: ■■ ■■

1,500

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Valuate portfolios and transactions Validate their internal models Meet regulatory reporting requirements

Call Platts at 1-800-PLATTS8 (1-800-752-8878) to learn more about this new service.

1,400 1,300 1,200 11-Sep

04-Oct

30-Oct

23-Nov

18-Dec

14-Jan

06-Feb

Copyright © 2013, The McGraw-Hill Companies

2

Platts Polymerscan

February 6, 2013

Euro Contract Assessments (Euro/mt) Holland Italy Spain Britain* PVC susp Gross 840-845 840-845 840-845 840-845 840-845 785-790 PVC susp Net 810-815 810-815 810-815 810-815 810-815 710-715 LDPE G-P LLDPE C4 LLDPE C4 LLDPE C6 LLDPE C6

FD NWE ** ($/mt) 1137-1144

1510-1515 1440-1445 1440-1445 1520-1525 1520-1525

1510-1515 1440-1445 1440-1445 — —

1480-1485 1440-1445 1440-1445 — —

1505-1510 1440-1445 1440-1445 — —

1480-1485 1440-1445 1440-1445 — —

1200-1205 1140-1145 1140-1145 — —

2044-2051 1949-1956 1949-1956 2057-2064 2057-2064

1465-1470 1495-1500 1405-1410 1515-1520 1510-1515

1465-1470 1495-1500 1405-1410 1515-1520 1510-1515

1465-1470 1495-1500 1405-1410 1515-1520 1510-1515

1465-1470 1495-1500 1405-1410 1515-1520 1510-1515

1465-1470 1495-1500 1405-1410 1515-1520 1510-1515

1219-1223 1244-1248 1169-1173 1261-1265 1257-1261

1983-1990 2023-2030 1902-1908 2051-2057 2044-2051

PP Homo Inj PP Copol

1410-1415 1460-1465

1410-1415 1460-1465

1400-1405 1450-1455

1410-1415 1460-1465

1400-1405 1450-1455

1220-1225 1260-1265

1908-1915 1976-1983

GPPS Net HIPS Net EPS

1620-1630 1735-1745 1695-1705

1620-1630 1735-1745 1695-1705

1620-1630 1735-1745 1695-1705

1620-1630 1735-1745 1695-1705

1620-1630 1735-1745 1695-1705

1402-1411 1502-1511 1467-1476

2193-2206 2348-2362 2294-2308

ABS GP/Nat ABS Ave color ABS Auto black

1985-1995 2285-2295 2335-2345

— — —

1985-1995 2285-2295 2335-2345

1985-1995 2285-2295 2335-2345

1985-1995 2285-2295 2335-2345

1718-1727 1978-1987 2021-2030

2687-2700 3093-3107 —-

PET bottle grade PET bottle grade PET bottle grade Net PET bottle grade Net APET film grade APET film grade Net

1415-1420 — 1310-1315 — 1405-1410 1300-1310

— — — —

1415-1420 — — —

1415-1420 — — —

1415-1420 — — —

1133-1138 1309-1315## 1100-1105 1271-1276##

HDPE HDPE HDPE HDPE HDPE

(Blown film) (Cast stretch film) (Blown film) (Cast stretch .film)

Inj Bmldg Film HMW 2-5 HMW 5-10



1773-1780

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

Platts European and African Polymer Spot Price Assessments FOB NWE FD NWE FCA Antwerp ($/mt) (Eur/mt) (Eur/mt) PVC SUSP 1070-1075 820-825 — ($/mt)

CFR Russia* (Eur/mt) 730-735 988-995

CFR Turkey** CFR North Africa ($/mt) ($/mt) 1100-1110 —

FD UK (GBP/mt) —

LDPE G-P LLDPE (Butene)

1730-1735 —-

1320-1325 1320-1325

1300-1305 1300-1305

1380-1385 1380-1385

1650-1655 1570-1575

1590-1595 1570-1575

— —

HDPE Inj Bmldg Film

1740-1745 1745-1750 1735-1740

1325-1330 1330-1335 1320-1325

1305-1310 1310-1315 1300-1305

1385-1390 1390-1395 1380-1385

1610-1615 1610-1615 1610-1615

1590-1595 1590-1595 1590-1595

— — —

PP Homo Inj PP Raffia PP Copol

1631-1638 — 1698-1705

1225-1230 — 1275-1280

1205-1210 — 1255-1260

1285-1290 — 1335-1340

1680-1685 1680-1685 1690-1695

1640-1645 1640-1645 1670-1675

— — —

PS G-P HIPS EPS ABS GP/Nat

1975-1985 2095-2105 1995-2005 2139-2141***

1520-1530 1645-1655 1560-1570 1640-1650

— — — —

— — — —

1940-1950 2060-2070 1960-1970 —

1960-1970 2080-2090 — —

— — —

1315-1320 — 975-980 —

— — — —

— — — —

PET bottle grade PET bottle grade Recycled PET Recycled PET

— — — —

— — — —

— — — —

1100-1105 1271-1276# 790-795 913-918#

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.

Copyright © 2013, The McGraw-Hill Companies

3

Platts Polymerscan

February 6, 2013

Polymers Polyvinyl Chloride

Europe Following end of January term settlements, which broadly fell between Eur10-15/mt, February got off to a mixed start, according to sources. February increases posted by suppliers ranged from plus Eur15-50/mt amid a backdrop of flat ethylene. Given the margin gain for suppliers in January, some consumers felt there was now scope to rollover prices for February, particularly if they had paid at the upper end of the spread in the past month. One trader observed that as a number of buyers had heard rollover being bid for February, they were now reluctant to consider anything higher, which was leaving some discussions at an ime. “We are being confronted with rollover at some s, but then we simply cannot supply?” another trader said. Producers, at this stage, had not fixed sufficient business to make an assessment of the market, although all insisted that the upward direction was non-negotiable due to the fragile state of vinyls margins. It was understood that production rates at a number of sites remained reduced in response to current demand levels, which added further pressure on production economics. The domestic spot market saw a wide range of price levels discussed. In the south, in response to allocations put in place by KemOne, some higher price levels reported, running up to Eur870/mt FD, unconfirmed, but were more regularly around the mid-Eur800s. However, for northern locations, where pressure was greater, bids from the most competitive pipe-grade buyers remained below Eur800/mt and truck sellers struggled to push-through price levels in the Eur820s. Meanwhile, the spot market continued to experience the effect of December, when prices dropped sharply toward the end of the month, leaving a gulf in price that was dependent on the timing of the purchase, rather than the size of the lot, according to sources. In the UK, spot interest was heard above the GBP700/mt mark on an FD basis, which marked around a GBP10/mt increase on January. One trader offered GBP750/mt and GBP775/mt FD UK but could find no buyer. In the Turkish market, the issue of low-priced stock sitting unsold in port remained the main talking point. Offers from all locations had now increased but, as one trader observed: “Who is going to pay the higher prices when no one is interested, even in the lower-priced stock that is here?” One trading source estimated that the cost of older stocks could average around $1,050/mt CFR. In turn, traders were heard selling off old stock of K65 and K68 ex-US origin at $1,040-1,060/mt before presenting new offers, which were at $1,080-1,090/ mt. All US offers are subject to a 6.5% import duty and $45/ mt anti-dumping. Iranian material was offered at a similar level to the US cargoes, while Korean was slightly cheaper, starting at around $1,050/mt ahead of a 6.5% levy, which took it to a similar level of the most competitive European material. European offers were now heard between $1,120-

Copyright © 2013, The McGraw-Hill Companies

1,160/mt CFR. In production news, one major who declined to be named would take around a four-week maintenance stop at its Botlek VCM and Pernis PVC sites H2 March into April, a company source said. The company was in the process of building stocks for the turnaround. Due to the effects of limited ethylene from the Napthachimie cracker at the same location, KemOne declared force majeure on suppliers of caustic soda out of its Lavera site at the end of January. However, to date, there had been no accompanying declaration on vinyls. A company source reiterated that some feedstock purchases, combined with stocks, had enabled allocation rates on resin to be capped at around 20-25%. The latest information from consumers affected by the outage of Lavera cracker was that ethylene would be available during March. Total and Ineos, which tly own the unit, declined to comment on any restart date. The cracker has been offline since December 22. Meanwhile, the Runcorn, UK, unit slated for closure would cease production in February, a company source said. In upstream news, naphtha prices were much firmer in the past seven days, coming up from the high $800s CIF ARA to the $970s CIF ARA Feb 5. The strength was matched by increases in the ethylene spot price.

United States US PVC export prices were up $5/mt week on week, assessed Wednesday at $1005-1015/mt FAS Houston, as four major US producers were reported sold out for February, and several traders reported spot product for any February shipments unavailable. The producer-to-trader price for March was heard to be around $1025-1045/mt FAS Houston, up $50/mt from February level, according to two market sources. “Official paperwork is yet to follow, however we’ve seen one producer coming in strong with at least a $1,025/ mt expectations for March shipments,” one trading source said. US PVC export negotiations between producers and traders generally take place in the third week of the month for the shipments to be scheduled in the following month. “Producer FAS price in the four digits (over $1,000/mt) makes trading to Europe, Asia and Africa impossible,” a trader source said. “South America is the only place left that we can still send product, especially with Mexichem still under a force majeure of export product,” the trader added. Offers were heard for late February deliveries at $1,300/mt CFR Brazil, followed by bids at $1,120 CFR Peru. One trade was reported at $1,100 CFR Peru for volumes “between 250 and 2000 metric tonnes”. Globally, the CFR China PVC assessment was unchanged week on week to be assessed at $1025/mt. CFR India was also stable week on week for a Wednesday assessment of $1,060/mt. The CFR Turkey assessment was at $1,100-1,110/mt. In domestic PVC markets, the US domestic prices were unchanged week on week, assessed at 49-51 cents/lb delivered via railcar, with little spot market activity reported in the spot market. In

4

Platts Polymerscan

contract nominations, Westlake, Oxy, Shintech, Formosa and Axiall(formerly Georgia Gulf) have announced 5-cent per pound increases effective March 1. Axiall was heard revising its original 3-cent price increase Wednesday afternoon. Producers cited a better-than-expected domestic market and a recent spike in spot ethylene market as drivers for increases in the domestic PVC price, sources said. In production, Formosa’s turnaround in Point Comfort, Texas, was expected to start in late February and last 3 weeks, sources said. Axiall was heard to have a planned a 3-week turnaround of its Plaquemine, Louisiana facility in mid-March, sources said. Shintech also planned a 3-week turnaround in late February at its Freeport, Texas PVC plant, sources said. Westlake Chemical’s ethylene cracker expansion was expected to be completed by end of February. In feedstocks, February spot ethylene was assessed Wednesday at 63.25-63.75 cents/lb MtB-Williams pipeline basis (down 2.25 cents/lb week on week) as BASF TOTAL Petrochemicals reported restarting its Port Arthur, Texas, steam cracker Friday.

Asia PVC on a CFR China basis was assessed flat week on week at $1,025/mt Wednesday amid limited discussion as the Lunar New Year holidays approached. The domestic Chinese ethylene-based PVC market was assessed at Yuan 6,900/mt Wednesday, up Yuan 150/mt week on week. Market sources attributed this to an anticipated tightening in supply from PVC producers in Taiwan and South Korea. “Feedstock ethylene prices have been on the rise as well,” a Chinese source said. Asian ethylene was assessed up $23/mt week on week at $1,415/mt CFR Northeast Asia Wednesday. Carbidebased PVC was assessed at Yuan 6,500/mt, flat from a week earlier. In Southeast Asia, PVC was assessed flat week on week at $1,055/mt, with trades heard around that level. Domestic demand in Thailand and Indonesia was heard to be healthy. “There’s replacement demand going on after the recent floods in Jakarta,” an Indonesian producer said. In India, PVC was assessed flat week on week at $1,060/ mt CFR India amid thin discussion. “Seems like there is no improvement in buying sentiment this week,” an Indian trader said. “Everyone knows the China market will be closed soon for the Lunar New Year holidays, so traders will see how prices move in the China market after the holidays and then decide their next move,” the trader added.

Latin America Latin American PVC assessments continued to rise week over week Wednesday, up $25/mt to $1,125/mt CFR Peru and up $50/mt to $1,185/mt CFR Brazil, amid tight supply and firm demand. Sources indicated that exports to Latin America had largely slowed as the Lunar New Year approached, which typically marks a quiet two weeks in the Latin PVC market as well as slow demand globally. One larger cargo of 1,200mt for shipment in March was heard sold at $1,085/mt CFR Cristobal in Panama. A weighted average of the deal price to accommodate the assessed cargo

Copyright © 2013, The McGraw-Hill Companies

February 6, 2013

size at Platts (100-300mt) on a CFR Peru basis was estimated at roughly $1,100/mt. “Some traders are confirming lower prices,” a source said. The last deal heard for late February was at $1,130 CFR Peru for a 250mt cargo. Given the recent March deal at $1,085/mt, some sources have said the market has tentatively flipped to backwardation during February and March. Some market participants were unsure as to whether the approaching Lunar New Year holiday could have contributed to a backwardated market, while others continued to talk the market notionally on a CFR Peru basis near $1,130/mt. Bids were heard at $1,120/mt CFR Peru this week for late February and early March. In the Brazilian market, offers were heard higher from the US, pegged as high as $1,300 CFR Brazil with the addition of freight and anti-dumping fees. Lower offers were heard from East Colombia at $1,200-1,220/mt CFR. Buyers in Latin America were heard resisting higher prices as inventories were described substantial enough to last through April due to buying from November 2012 through early February 2013. In the US, at least four turnarounds were expected to occur from February through March, which sources expected could further limit cargoes of PVC available for export to Latin America from the US during that time frame. Most US producers were heard sold out for February, with one major producer heard sold out for March as well. US PVC was assessed Wednesday at $1,010/mt FAS Houston, up $5/mt week on week. In Chile, offers to the country for February were still heard at $1,090/mt CFR. In production based in Latin America, Mexichem was still heard to be under force majeure for its PVC business, sources said. Confirmation from the company was unavailable.

Low Density Polyethylene

Europe European low density polyethylene converters rejected hikes proposed by producers in the February contract market, citing bearish near-term expectations of end- demand. European PE producers said they continued to target a small increase for the Feb up to Eur50/mt. “Orders are ticking in. However, we realize that another round of increases after January won’t be that easy,” a producer said, adding that he was targeting an increase of Eur10-20/mt to Eur1,5501,550/mt FD NWE. “So far, customers are willing to start negotiations at an increase,” another producer said, adding he was targeting an increase of Eur50/mt. A third producer said they had forgone ramping rates in an effort to maintain margins, adding: “We are currently running at 83-84%.” Elsewhere, two converters said they were unable to meet downstream tonnage targets for January, which led them to seek a rollover for February. “We are working on a weekly basis with inventory, keeping stock levels low,” one of the converters said. The contract price was assessed unchanged in February at Eur1,510-1,515/mt FD NWE. Producers said the strength in the energy complex, as well as firmness in Asian PE prices, mitigated the risk of a fall in prices in

5

Platts Polymerscan

Europe. The CFR Far East Asia marker rose $23/mt week on week, to $1,463/mt Wednesday, on post-holiday optimism. Naphtha was assessed at $992/mt CIF NWE Wednesday, up $29.75/mt week on week. Meanwhile, converters expected a further downside to materialize in the LDPE spot market. However, tempered buying appetite led to a further easing in the spot market. “A producer has directly offered us LDPE MFI 4.0 at Eur1,270/mt FCA, while another is asking us to bid for 0.7 MFI. This reflects that producers are getting long on product,” a converter said; another buyer added: “FCA levels are still at Eur1,300/mt for NWE. Some traders are liquidating positions more competitively.” Traders pegged LDPE spot prices at Eur1,300-1,350/mt FD NWE. “Demand has gone soft; we are chasing orders,” one trader said. LDPE prices were assessed at Eur1,320-1,325/mt FD NWE, down Eur20/mt on the week. In the UK, spot prices were heard firm on the weakness of the pound at GBP1,1001,140mt FD. In Turkey, citing tight supplies, Middle Eastern producers increased offers to $1,600-1,620/mt CFR, subject to 6.5% duty. “A weaker dollar has contributed to price increases; demand is still soft,” a Turkish source said. Local producer Petkim also increased its list price by $10/mt this week to $1,810-1,830/mt CFR. In downstream news, one LDPE producer said demand for wire and cable LDPE grades was ive, adding: “The seasonal factor and cuts in infrastructure throughout Europe are to blame.” Converters said they were operating with spare capacity on all end products. “Demand has been moderate since the second half of January,” one buyer added.

United States US low density polyethylene spot prices rose $10/mt week on week to an assessment of $1554/mt FAS Houston, with sources saying prices remained too high for many deals to get done. Industry sources continued to talk of limited product availability from producers, with offers for export material heard around 71 cents/lb FAS Houston ($1,565/ mt). Sources said those prices would not work for export. Multiple sources said there doesn’t appear to be much LDPE available for spot deals, and there was no indication that the supply shortages would improve any time soon. “The overlying theme we heard from producers is ‘we’re not going to have much,’” said one US distributor source, who added that most of the attention from producers is focused on large contract buyers. Sources said that the amount of LDPE those large buyers order over the next couple of weeks will have a major impact on how much, if any, LDPE will be available for spot deals, as well as how much success producers will have in pushing through 4 cents/ lb increases for February domestic contracts. Dow has also announced an additional 4 cents/lb increase for March, according to a letter to customers that was obtained by Platts. LDPE domestic contracts for January were assessed at 79-81 cents/lb, up 5 cents from December. Whether or not those prices will continue to rise is the big question facing market players. “It’s tough to tell this early in the month,” a US distributor source said. Producers were

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February 6, 2013

heard to be sitting on lower inventories, and would have an easier time getting the increase if the market remains tight, sources said. Downstream sources continued to point to the weak demand that has been largely attributed to prices that have risen throughout 2013, as downward pressure on feedtock ethylene prices as factors that will make it tough for producers to justify an increase in PE prices. US spot ethylene was down 2.25 cents/lb week on week, assessed Wednesday at 63.25-63.75 cents/lb FD USG as lower demand and the restart of BASF-Total’s 816,000 mt/year ethylene capacity steam cracker in Port Arthur, Texas, appeared to help push prices back down, sources said. “The drop in ethylene will hurt the 4 from firming,” one downstream source said. In contracts, the January US ethylene contracts were heard settling 3.5-cents higher than December, elevating the net transaction price to 48 cents/lb, market sources said this week. Sources have said turnarounds of ethylene crackers by Dow in March, Chevron Phillips Chemical in April and Williams and Nova in May could contribute to tighter PE supplies in the coming months.

Asia The Asian low density polyethylene market firmed this week as market optimism improved amid expectations of a post-Lunar New Year pick-up. The CFR Far East Asia marker rose $23/mt week on week to $1,463/mt Wednesday, while the CFR Southeast Asia market rose $10/mt to $1,480/ mt. Iranian cargoes were heard offered at $1,450-1,470/ mt with L/C 90 days. These were not used in the Platts assessment process due to their sanctioned nature. Many Chinese factories have been winding down operations for the Lunar New Year holiday season since last Friday. Trading activity was also slow this week as market participants were not able to find logistics and banking facilities just before the holidays. Sentiment in the PE market was positive as participants expect buyers to step back into the market after the holidays. In Southeast Asia, a regional producer sold some cargoes at $1,480-1,500/mt CFR at the end of last week. “We finished selling our cargoes last week. There is not much discussion this week,” a regional producer said.

Latin America The Brazilian low density polyethylene price assessment increased by $90/mt week on week to $1,695-$1,705/mt on higher US offers and Asian product, sources said. Asian producers took the opportunity to increase offer prices since US producers have been increasing prices and Braskem communicated its intentions to increase pricing by $100120/mt in February, said a Peruvian buyer. “Customers are not purchasing the higher-priced US material, and the months of January and February are typically slow months in Brazil, in part due to the Brazilian Carnaval festival, so price hikes were not really expected”, said a trader in the region. The Brazilian LDPE FOT price to the Mercosur region decreased by $40/mt to $1,535-$1,545/mt FOT basis on sufficient supply from Asia, Europe, and Dow Chemical

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in Argentina driving down pricing. A buyer from Uruguay identified shipping cost was $140/mt from Argentina to Uruguay in the Mercosur region (for approximately 1,200 kilometers). The LDPE price assessment for the Peruvian import market increased by $25/mt week on week to $1,625-$1,635/mt CFR Peru on higher Asian and US-origin offers. Market bids for LDPE in Peru were heard in the area of $1,605-$1,615/mt CFR Peru. The Peruvian market was described as having strong pricing competition and steady demand, according to market participants. US-origin LDPE material was heard offered by a Peruvian buyer at $1,710/ mt, CFR Peru, 1H February delivery, for 300 mt, which sources described as above market prices. Another buyer in the region heard a US offer of $1,640/mt CFR Peru for LDPE material. Asian-origin product was also heard offered at $1,660/mt CFR Peru, 2H February delivery. Into the west coast, a regional trader heard US-origin product offered at $1,700/mt CFR Ecuador, 2H February delivery, for 100 mt. Into the east coast, in Argentina, bids for LDPE were in the $1,620/mt range while offers were heard at $1,640/mt CFR Argentina, 2H February delivery, for 100 mt. Into Uruguay, a buyer heard an offer for LDPE of $1,700/mt CIF Montevideo for DOW Chemical’s Argentinian-origin product. Europeanorigin product was heard at $1,900/mt CIF Montevideo.

Linear Low Density Polyethylene

Europe The European linear low density contract market was characterized by converters resisting increases submitted by producers. “A rollover of prices for the month seems to be the best option in the face of listless downstream demand,” one converter said. However, producers ruled out concessions in prices. “Stocks in the chain are not high; feedstocks are still high and Asia is firm,” one producer said. LLDPE prices rose $20/mt week on week across the board, to be assessed at $1,480/mt CFR Far East Asia, on expectation that firmness in prices would continue beyond the Lunar New Year holiday season. Meanwhile, upstream, naphtha was assessed at $992/mt CIF NWE Wednesday, gaining $29.75/mt on the week. Another producer said they would not accept an increase below Eur40/mt. However, a Middle Eastern producer said converters were challenging an increase for February s, adding: “Material availability has improved.” In a directionless market, contract prices were assessed unchanged on the week at Eur1,440-1,445/ mt FD NWE. Likewise, in the spot market, pressure from listless buying set the tone. One converter said he had been able to buy at Eur1,300-1,310/mt FD NWE for imports and domestic product. “Last week, we were offered product at Eur1,340-1,360/mt FD NWE; this week, the same traders said they were willing to negotiate on those offers,” another converter said. Overall, converters were operating with spare capacity on all end products, choking demand for incremental product. “Demand has been moderate since the second half of January,” one buyer added. Trader offers

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February 6, 2013

were heard at Eur1,300-1,350/mt FD NWE. Prices were assessed at Eur1,320-1,325/mt FD NWE, down Eur5/mt on the week. Meanwhile, tightness in LLDPE C4 was not as “severe” as previously, sources said. “No one is crying for product anymore,” a trader said, adding: “We are chasing customers.” In the UK, a weak pound helped keep spot prices firm at GBP1,100-1,140/mt FD. In Turkey, Middle Eastern offers were higher at $1,570-1,600/mt CFR, subject to 3% duty. Middle Eastern producers said prices continued to head higher this week as supply remained restrained by heavy turnarounds. Saudi’s Petro Rabigh was heard starting to offer limited volumes after restarting its petrochemical complex in mid-January. The site was shut at the end of December due to a power outage. The complex produces LLDPE, HDPE and PP. In downstream news, converters said orders for agriculture films had begun to trickle in for delivery from March. However, industrial film demand failed to pick up, they said. “Compared to January 201, our volumes are down 10%,” one converter said.

United States US domestic contracts for linear low density polyethylene rose 5 cents/lb for January, after producers were heard finalizing negotiations with major US buyers, according to industry sources. January contracts were assessed at 66-67 cents/lb for delivered railcars, a 5 cents/lb increase from December. The increase was expected, according to sources, and matched the increase announced by US producers heading into the month. Sources have pointed to rising prices for feedstock ethylene and heavy December buying as factors that contributed to the raise after December contracts rolled over. US producers have already announced a 4 cents/ lb increase for February, and there was a prevailing belief among industry sources that March increase announcements could also be coming after Ineos sent letters to customers this week saying that March prices for all grades of high density polyethylene would go up an additional 4 cents/ lb. “I don’t think anything is going to stop it,” a US trader source said of the February increase. Another downstream source argued that demand has been down in January because of higher prices and raising prices and the market will not higher LLDPE prices. But with supplies heard tight and market players looking ahead to ethylene cracker turnarounds in March, April and May, sources said price relief may not be coming any time soon. “I don’t see it getting any better until late April or May.” a US distributor source said. LLDPE spot prices continued to rise in a tight market, and were assessed Wednesday at $1510/ mt FAS Houston, up $11/mt week on week. One US trader source reported hearing no offers for LLDPE this week while another saw one offer from the secondary at 69 cents/lb FOB Houston. A producer source said his company was currently out of January material, and so were other producers, so any material being moved was likely left over from December. Multiple sources said the higher US spot prices were keeping buyers away, especially the ones who still had LLDPE supplies from heavy December buying. Other sources said

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the spot prices had essentially priced the US out of the export market because the numbers did not work. Market sources continued to monitor the cost of feedstock ethylene, hoping that lower prices could help lower pressure on current HDPE prices. US spot ethylene was down a quartercent Wednesday, assessed at 65.50-66 cents/lb FD USG. February was heard offered at 66.50 cents/lb MtB Wms, a day after spot traded at 66 cents/lb and bids as low as 65.25 cents/lb MtB Wms.

Asia Asian linear low density polyethylene ticked up this week on expectations the market would improve after the Lunar New Year holidays. LLDPE prices rose $20/mt week on week across the board to be assessed at $1,480/mt CFR Far East Asia, $1,500/mt CFR Southeast Asia and $1,480/mt CFR South Asia. Trading activity in China has been winding down since the end of last week due to the Lunar New Year holidays. Amid the lack of buying appetite, sellers have stopped making offers actively. Offers were heard at $1,490-1,500/mt on Monday, but have been absent from the market since Tuesday. Market sources expect prices to be firmer after the festive season as end-s were heard to be keeping very low inventories of the resin. Actively traded May LLDPE futures on the Dalian Commodity Exchange rose Yuan 305/mt week on week to Yuan 11,325/mt Wednesday. In Southeast Asia, Middle Eastern cargoes were heard concluded at $1,460-1,500/mt CFR. A Thai producer were heard offering at $1,520-1,540/mt CFR Southeast Asia. In South Asia, market activity was thin as most sellers closed their offers last week. Cargoes were heard concluded at $1,470-1,480/mt CFR India late last week. This week offers were heard at $1,500/mt with little interest seen.

Latin America The Brazilian linear low density polyethylene assessment increased by $85/mt week over week to $1,675-$1,685/mt CFR Brazil on stronger US and Asian offers. Latin American import prices increased as US producers in January increased domestic pricing by 5 cents/lb ($110/mt) followed by a 4 cents/lb ($88/mt) increase in February. US producer March price increases have been indicated up 4 cents/lb ($88/mt) by both Ineos and Dow Chemical. A Brazilian trader noted that new product from the US into Brazil was very difficult to sell as US domestic pricing was 70 cents/lb ($1,520/ mt) FOB Houston while traders mostly want an additional $180/mt to cover margin, packaging and freight bringing the targeted offer price to roughly $1,700/mt, above many exporting regions, notably Asia. Into Brazil, US-origin offers were heard at $1,690/mt CFR Brazil for H1 February delivery, while bids were heard at $1,670/mt CFR Brazil for 500 mt. Shipping costs to Brazil were identified roughly at $75/mt from both the US and Europe, $140/mt from South Korea and $155/mt from the Middle East, according to a Brazilian trader. The Brazilian LLDPE export price to the Mercosur region was heard at $1,525-$1,535/mt FOT Brazil, a decrease of $10/mt week on week, due to lower priced Asian-origin

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February 6, 2013

offers. The LLDPE Peru price assessment rose by $55/mt, week on week, to $1,615-$1,625/mt on increasing US and Asian offers. Asian-origin LLDPE was heard offered by a local buyer at $1,650/mt CFR Peru, while most bids were heard $20/mt lower at $1,630/mt CFR Peru for volumes over 300 mt. For Peruvian LLDPE material, US-origin offers were heard at $1,625-$1,695 CFR Peru basis. In Argentina, US-origin LLDPE was heard offered at $1,635/mt CFR Argentina for 100 mt. Bids for US-origin LLDPE were heard $20/mt cheaper at $1,615/mt CFR Argentina, by a regional trader. Into the west coast of South America, a buyer heard an offer of $1,690/mt CIF Montevideo for Argentinian-origin product from producer Dow Chemical - Argentina. Brazil’s Braskem was heard offering LLDPE into Uruguay at $1,665/ mt CFR Uruguay, a $25/mt discount to where producer Dow Chemical-Argentina was selling material. US-origin LLDPE was heard offered at $1,680/mt CFR Ecuador, delivered H1 February, by a regional trader. Bids for the US-origin LDPE were heard at $1,660/mt for 100 mt.

High-Density Polyethylene

Europe European high density polyethylene contract prices rolled over this week as February increases announced by producers were met by lukewarm buying from converters. “Two producers already suggested the possibility of a rollover. Increases this month are unlikely,” a converter said. “Demand has been moderate since the second half of January,” one buyer said, adding that he also saw a rollover as the final outcome. HDPE producers were aiming for price increases ranging from “small” to Eur50/mt. One producer reported gross prices at Eur1,475/mt FD NWE, Eur1,505/mt and Eur1,415/mt for injection, blowmolding and film grade, adding: “We thought traders had become more active; our order intake is healthy on the contract side”; a producer added: “Stocks in the chain are not high, feedstocks are still high and Asia is firm.” HDPE-film grade was assessed at $1,490/mt CFR Far East Asia Wednesday, up $20/mt week on week, on expectation of continuing price firmness beyond the Lunar New Year holiday season. Meanwhile, upstream, naphtha was assessed at $992/mt CIF NWE Wednesday, gaining $29.75/mt on the week. At the same time, HDPE producers agreed that February was more difficult in of price increases than January. In the spot market, imports continued to weigh on prices. However, according to a source, continued production issues at Ineos’ Lavera, , HDPE site, as well as a strike at SABIC’s site in Geleen, the Netherlands earlier this week, choked price falls. In the blowmolding market, imports from the US were heard at Eur1,220-1,250/mt CFR, while European offers were at Eur1,320-1,350/mt FD NWE. In the injection market, imports for melt 4 and melt 8 were heard at Eur1,270/mt CFR NWE, while European product remained heard in the range of Eur1,320-1,350/mt FD NWE. Bi-modal film offers were heard at Eur1,330-1,360/mt FD NWE, while

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unimodal offers were below Eur1,330/mt FD NWE, sources added. HDPE prices were assessed unchanged on the week at Eur1,325-1,330/mt FD NWE, Eur1,330-1,335/mt and Eur1,320-1,325/mt for injection, blowmolding and film, respectively. In Turkey, Middle Eastern producers increased offers, citing tight supplies to $1,590-1,620/mt CFR, subject to 6.5% duty. “A weaker dollar contributed to the price increase; demand is still soft,” a Turkish source said. Local producer Petkim also increased its list price by $10-20/mt this week to $1,750/mt FCA Aliaga for blowmolding and injection grade. In production news, workers at SABIC’s Geleen petrochemical complex, in the Netherlands, ended their four-day strike, a company spokeswoman said Tuesday. SABIC and the workers will continue discussions over a new labor agreement, which they aimed to finalize this week, the company added. The strike began last Thursday, triggered by both parties’ failure to agree a new labor contract to replace the previous one, which expired in June 2012. A company source said Wednesday that HDPE production at the site had returned to normal.

Africa Spot polyethylene prices in North Africa continued to head higher this week as supply remained restrained by heavy turnarounds in the Middle East, industry sources said. Qatar Petrochemical Co. (Qapco), for instance, settled its February contract price for low density PE at $1,500/mt FD UAE, up $50/mt from January, sources close to negotiations said. The company also raised linear low density and high density PE-blow by $10/mt and $70/mt, to $1,470/mt and $1,490/mt FD UAE, respectively, the same sources added. In North Africa, LDPE and LLDPE offers from the Middle East were heard at $1,600/mt CFR and $1,570-1,600/mt CFR, respectively. “Middle Eastern offers are being accepted in the market, because Asian offers are even higher,” a North African source said. HDPE levels were heard at $1,600-1,620/ mt CFR.

United States Market sources talked of limited activity in the high-density polyethylene market, with producers’ inventories heard tight and downstream buyers resisting higher prices that have limited spot and export activity in recent weeks. HDPE blowmolding was assessed Wednesday at $1,477/mt FAS Houston, up $11/mt week on week. Spot HDPE injectiongrade prices were assessed Wednesday at $1,510/mt FAS Houston, up $33/mt week on week, and high-molecular weight film was assessed at $1,521/mt FAS Houston, up $33/ mt week on week. A trader source said many buyers balked at higher prices, and the current levels don’t work for export. As a result, there have been very few deals in the past few weeks. A pair of deals for injection molding were reported on the Houston Mercantile Exchange Tuesday, with single railcars moving for 65 cents/lb FOB Chicago for Rail and 67 cents/lb FOB Akron for Housewares, respectively. Despite low demand, producers and sellers won’t be in any hurry to drop prices to a level that works for export — indicating supply is tight,

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February 6, 2013

according to multiple sources. “Producers don’t have it right now,” a distributor source said, adding “nobody is sitting on any.” US producers have nominated 4 cents/lb increases for February contracts, and sources said the next week could go a long way in determine if producers will be successful in pushing the increase through. “It will be interesting to see next week how orders are coming in, said one US distributor source, noting that if big buyers are putting in maximum orders, it could mean less material will be available later in the month for spot, strengthening the case for the February increases. January HDPE contracts were assessed at 68-69 cents/lb delivered railcar for injection, 68-69 cents/lb delivered railcar for blowmolding and 71-72 cents/lb delivered railcar for high-molecular weight film after producers raised prices 5 cents/lb in January. Ineos and Dow sent letters to customers advising them of an additional 4-cent increase for March, in addition to the 4-cent increase for February. Because other US producers had not followed suit, sources saw it as a sign that the February increases may not have necessary . The market also monitored ethylene prices, down 2.25 cents/lb on week, assessed Wednesday at 63.25-63.75 cents/lb FD USG as slower demand and a steam cracker restart at BASF-Total’s Port Arthur, Texas facility put downward pressure on prices, sources said. In ethylene contracts, January US contracts were heard settling 3.5-cents up from December, elevating the net transaction price to 48 cents/lb, sources said.

Asia The Asian high density polyethylene market was very quiet this week, with little activity seen ahead of the Lunar New Year holidays. HDPE-film grade was assessed at $1,490/ mt CFR Far East Asia Wednesday, up $20/mt week on week. In Southeast Asia, it was up $10/mt week on week at $1,495/mt CFR, and in South Asia up $20/mt at $1,500/ mt CFR. Trading activity thinned dramatically as the week progressed as market participants prepared for the Lunar New Year holidays. Most end- factories in China were shut at the end of last week to allow workers to return to their hometowns for the holiday. Amid the lack of buying appetite, sellers have stopped actively making offers. Offers were heard at $1,510-1,520/mt on Monday, but disappeared Tuesday. Several dealers and distributors were heard to have restocked some quantities last week in anticipation that buying appetite will return after the Lunar New Year and prices will rise. Market sources expect prices to be firmer after the festive season as end-s were heard to be keeping very low inventories of the resin. In addition, feedstock prices are getting stronger. In Southeast Asia, a Thai producer were heard offering at $1,520-1,540/mt CFR Southeast Asia. ASEAN Cargoes were heard sold at $1,520/mt CFR Vietnam, $1,515-1,520 CFR Philippines and $1,500-1,510/mt CFR Malaysia. Vietnam does not impose import taxes on polymers. “It is extremely quiet in Vietnam as buyers prefer to monitor the situation in China. In Indonesia, there is not much change in trading activity,” a regional source said. In South Asia, cargoes were sold at

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$1,500/mt CFR India late last week. Most producers finished selling their cargoes last week. Offers were heard at $1,510/ mt CFR India this week.

Latin America The Brazilian price assessment increased for all three polyethylene grades as a result of rising US producer prices and decreasing Asian product availability. The high density blowmolding price assessment rose by $85/mt to $1,655$1,665/mt CFR Brazil on higher US offers. Into Brazil, US-origin offers for blowmolding material were heard at $1,665-$1,675/mt CFR Brazil by buyers in Brazil, while bids were reported roughly $20/mt lower for minimum volumes of 500 mt. Film grade in Brazil was assessed at $1,675-$1,685/mt CFR Brazil, an increase of $45/mt week on week as a result of tightening supply in the region. US-origin offers were reported by a local trader at $1,690/ mt CFR Brazil. The Brazil price assessment of injection grade increased $65/mt to $1,675-$1,685/mt CFR Brazil on higher US offers. US-origin injection grade in Brazil was heard offered at $1,690/mt CFR Brazil by a Brazilian trader. The blowmolding grade Brazilian export price assessment into the Mercosur region increased to $1,535-$1,545/mt FOT Brazil, a slight increase of $5/mt on tightening supply. The Brazilian export price assessment into the Mercosur region for film grade decreased by $20/mt to $1,525-$1,535/mt FOT Brazil. The price assessment for Brazilian-origin injection grade polyethylene to be exported into the Mercosur region increased by $30/mt to $1,560-$1,570/mt FOT Brazil. The domestic Brazilian market was said to be experiencing tempered demand due to the lower activity months of January and February, in part due to Brazil’s Carnaval celebration beginning on February 9, according to a regional trader. Many buyers were expected to let inventory levels thin out during January and February, increasing demand for the faster delivered US-origin product in March. Additionally, Chinese demand was expected to increase in Asia in March, taking up a great deal of local Asian supply. The Peruvian blowmolding price assessment was increased by $15/mt to $1,605-$1,615 CFR Peru, on higher Asianorigin prices. Asian producers are taking advantage of the continued US producer price increases to raise their prices. The Peruvian film grade price assessment increased by $45/ mt to $1,645-$1,655 CFR Peru on higher US and Asian priced offers. A deal was reported by a Peruvian buyer done this week at $1,620/mt CFR Peru for film grade for 300 mt. Film grade has been described as the tightest in supply of the high density grades by market participants. US-origin film grade material was heard offered at $1,655-$1,735 CFR Peru by buyers in the region. Firm bids for US-origin material were reported at $1,635-$1,645/mt CFR Peru for 300 mt by local buyers. Asian-origin film grade HDPE was heard offered at $1,660/mt CFR Peru. Injection grade in Peru was also assessed at $1,645-$1,655 CFR Peru, an increase of $15/mt. Asian offers were heard at $1,655-$1,665 CFR Peru, while bids were reported at $1,635-$1,635 CFR Peru. Into the east coast of South America, US-origin blowmolding was

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February 6, 2013

heard offered at $1,580/mt CFR Argentina, with bids around $1,560/mt CFR Argentina for 100 mt. In Argentina, film grade was heard offered at $1,600/mt CFR Argentina for 100 mt while bids were heard at $1,575-$1,585 CFR Argentina for the material. Injection grade in Argentina was heard offered at $1,665/mt CFR Argentina. US-origin blowmolding was heard offered in Ecuador at $1,640 CFR, film grade at $1,720 CFR on tight supply and injection grade at $1,640/ mt CFR. Into the west coast, in Uruguay, Dow Chemical Argentinian-origin blowmolding product was heard offered at $1,700/mt CIF Montevideo. Film grade was heard offered into Uruguay at $1,690/mt CIF Montevideo.

Polypropylene

Europe Bearish pressure persisted in the spot polypropylene market this week, blocking attempts by sellers to further increase prices. February demand was off to a slow start, particularly after several producers flagged a Eur50-60/mt price increases, which put off buyers. “I do not think producers are getting the price increases they wanted. Buyers are not in a hurry. They prefer to wait and look for lower prices,” a trader said. Demand outlook for the rest of February was unclear as trading activity was seen remaining light during the Lunar New Year holidays. Many traders said Eur1,250/mt was already “out of the market,” adding that most businesses were done at around Eur1,220-1,240/mt FD NWE. Imports were heard limited, particularly from the Middle East, where supply continued to be constrained by turnarounds. Several European producers itted conceding to pricing flexibility as initial price increase targets of Eur40-60/mt proved unrealistic. One producer claimed he had managed to achieve a Eur30-35/mt hike, far above the Eur10/mt monomer -through. Meanwhile, two producers said they increased February s by Eur20/mt on the back of the Eur35-45/mt rise secured in January. Elsewhere, converters were convinced that a rollover to plus Eur10/ mt was the best range for the February market. “I accepted plus Eur20-25 in January, even though the monomer fell Eur13,” one converter said, adding that he expected his February to be flat. Overall, the market was regarded as balanced as plant run rates remained reduced to 80-85% in February, because producers continued to adjust production with demand. Downstream, converters expected the food packaging segment to pick up ahead of the seasonally strong spring-summer period, while other key markets, such as automotive and construction, remained poor. Spot prices fell Eur20/mt Wednesday week on week, while gross contract prices were unchanged. In Turkey, fresh February offers were heard $30-100/mt higher, traders said, citing increased production costs, thin margins and limited supply as key drivers for the rise. Turkish prices already reached $1,680-1,685/mt CFR Istanbul, post duty, on January 30, the highest since June 8, 2011, Platts data showed. The highest February posting heard was from a Middle Eastern producer,

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at $1,650-1,680/mt, before 6.5% duty, which most sources said was “not workable.” One trader said Turkish prices were at more than a $100/mt above Chinese levels, which was limiting the upside in domestic values. Asian products were heard traded at around $1,570-1,600/mt. In production news, Borealis is to shut PP plants at its Beringen site, in Belgium, for a two-week turnaround in March and April, a company spokeswoman said. The 230,000 mt/year unit will be offline in H2 March, while the 155,000 mt/ year line will be down in H2 April. Elsewhere, workers at SABIC’s Geleen site, in the Netherlands, ended their strike and returned to work Tuesday, a company spokeswoman said, adding that production lines affected by the industrial action were ramping up. Cracker and polymer output was reduced due to the strike. Details of the lost production were not disclosed. A company source said Tuesday that one of the five PP plants was shut. The plants have a combined PP output of 620,000 mt/year. “The plants are being ramped up again,” the source said, adding that the effect of the strike on the company’s deliveries to customers had been limited.

Africa Spot polypropylene prices in North Africa remained on solid ground this week as supply continued to be restrained by plant turnarounds in the Middle East. February offers were heard rising a further $50-100/mt, according to sources, who said these levels were met with a lukewarm response from buyers. “Prices have gone up a lot...and customers are now backing off,” a trader said, adding that most buyers would prefer to wait and see how the Asian market developed after the Lunar New Year. Another trader said caution has begun to set in as most buyers were increasingly worried about a possible correction once the polymer plants on turnaround came back on-stream. “North Africa will change pretty quickly once these plants are back,” the trader added. NatPet’s 400,000 mt/year Yanbu plant will be back up in the second half of February following a two-to-three-week turnaround that started at the end of January. Saudi’s Petro Rabigh was also heard starting to offer limited volumes after restarting its petrochemical complex in mid-January. The site was shut at end-December due to a power outage. Spot PP prices reached $1,640-1,645/mt CFR North Africa on January 30, the highest since June 8, 2011, Platts data showed. In the contract market, UAE’s Borouge raised its February contract prices for homopolymer and copolymers by $60-85/mt FD UAE, while SABIC hiked prices by $90/ mt, to $1,630/mt FD UAE, sources said.

United States Still reeling from a 16-cent/lb ($353/mt) surge in contracts to open 2013 that left prices at the highest levels since April 2012, the US polypropylene market was bracing for another spike in domestic contracts in February. Major producer Formosa Plastics late last week communicated to customers via letter its intention to raise prices across all grades by 9 cents/lb ($198/mt). The nomination is in line with market expectations from the monomer side, where producers

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February 6, 2013

ExxonMobil Chemical (polymer-grade propylene) and Shell Chemical (chemical-grade propylene) are also pushing for 9-cent/lb hikes for February, based on continued strength in the spot refinery-grade propylene market, sources said. The PP market keeps a close eye on propylene settlements as most contracts are on a monomer-plus basis. Last week talk in the market centered around a possible 5-7 cent increase on contracts, but such expectations had increased to as much as 8 cents/lb by Tuesday, sources said. Platts assessed homopolymer injection contract prices for January at 82-83 cents/lb ($1,807-$1,829/mt delivered, the highest since 86.50 cents/lb ($1,906/mt) last April. The price ed for a monomer-derived increase of 15 cents/lb and a 1-cent/ lb margin expansion on average negotiated by producers at the end of 2012, sources said. A distributor said some customers are hesitant to commit to taking on railcars at the higher prices, and are inquiring about smaller parcels to avoid running out of material. Distributor sources said demand has picked up over the past two weeks as those hoping for a February decrease saw more increases coming. Spot pricing in the secondary market was heard talked in a wide range, but higher in the high-70s to low-80s cents/ lb for generic prime homopolymer. Continued strength in the domestic market was pricing US-origin material out of the export market, sources said. Thai-origin product was expected to arrive to the West Coast after a distributor put in an order for 5 million lbs, sources said. The FAS Houston assessment for homopolymer injection was at $1,642$1,664/mt, flat week on week. At these levels, US-origin material was unworkable to points beyond Mexico and maybe Central America, source said.

Asia Asian polypropylene prices rose this week in China tracking feedstock costs but were stable in other regions. The PP raffia and injection markers were assessed at $1,465/mt CFR Far East Asia Wednesday, up $15/mt and $14/mt, respectively, week on week. In Southeast Asia and South Asia, the PP raffia/injection markers remained unchanged over the same period at $1,528/mt CFR SEA and edged up $2/mt to $1,520/mt CFR South Asia. Key feedstock propylene jumped $50/mt week on week at $1,360/mt FOB Korea and was up $55/mt at $1,400/mt CFR China Wednesday. A major Indian producer offered March loading cargoes last Friday at $1,530/mt CFR China, with 5,000 mt of raffia grade and 2,000 mt of injection grade concluded at the offer level this week. Platts did not reflect the transactions as the arrival falls outside its assessment laycan of 15-30 days forward. Few offers or bids were heard in the market this week as Chinese participants left the market for the long holidays. The China market will be shut February 9-15 for the Lunar New Year. End February/early March arrival cargoes were offered Monday at $1,460-1,480/mt CFR China. Offers were at $1,500/mt CFR China Wednesday, while no bids were heard. A Chinese trader concluded H2 February arrival cargoes at $1,470-1,480/mt CFR China, but sources said trades concluded this week were not a full reflection of

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the market price level as discussions were thin with many participants away from the market. BOPP grade was heard at a of $20/mt to raffia grade but participants were unsure amid the thin discussion. In Southeast Asia, ASEAN-origin cargoes were concluded at $1,600-1,620/mt CFR Indonesia, and Indian-origin March loading cargoes concluded at $1,530/mt CFR Southeast Asia. A Thai producer offered end February/early March cargoes at $1,600/mt CFR SEA, without attracting import taxes of 5-10% under the ASEAN free trade agreement. Market sentiment was firm amid rising feedstock costs, with customers resisting further increases as finished goods were not selling as well as expected. In South Asia, trades were at $1,520/mt CFR India, with offers at $1,525-1,530/mt CFR. IPP film grade was offered at $1,540-1,550/mt CFR India. Prices were ed by firm demand, an Indian trader said. “[The market is] bullish. There is no longer any economic concerns,” the trader added. Block copolymer prices rose $22/mt week on week to $1,480/mt CFR Far East Asia, rose $7/mt to $1,545/ mt CFR Southeast Asia and rose $5/mt to $1,535/mt CFR South Asia Wednesday. Producers said block copolymer was commanding a of $10-20/mt to raffia as demand recovered in the region. No offers were heard in China, while a Thai producer offered end-February/early March cargoes at $1,670/mt CFR Indonesia, without attracting import duties. Offers in South Asia were at $1,550-1,560/mt CFR. No deals were heard. Upstream, front month ICE Brent crude futures were assessed Wednesday at $116.57/barrel at 4:30 pm Singapore time (0830 GMT), up $2.19/b week on week, while naphtha was assessed at $993.25/mt CFR Japan, up $23.50/mt over the same period.

Latin America In Peru, homopolymer assessments for the import market increased by $30/mt week on week, assessed at $1,625-$1,635 CFR Peru on increased Asian-origin priced offers. Asian-origin offers have been reported as trailing increasing US-origin offers, according to market sources. Asian-origin offers were heard for homopolymer at $1,670 CFR Peru while South Korean offers were heard at $1,650 CFR Peru for 300 mt. The Peruvian co-polymer assessment increased by $30/mt week on week to $1,655-$1,665 CFR Peru on rising Asian offers. Asianorigin offers were heard as high as $1,705/mt CFR Peru this week by a trader in the region. The Peruvian domestic market was described as very tight and experiencing continued pricing from international markets by a Peruvian buyer. “Domestic prices in Peru experienced price increases 3 times in January and 2 times in the month of February,” a buyer in the region said. In the Peruvian domestic market, homopolymer was heard at $1,800-$1,900/mt and co-polymer material was heard at $1,840-$1,940/mt by a local market participant. In Asia, the block co-polymer price assessment increased by $22/mt week on week in Far East Asia to $1,479$1,481/mt CFR FE Asia, while the block co-polymer price assessment rose by $7/mt in Southeast Asia to $1,544-$1,546/ mt CFR SE Asia. In Brazil, the homopolymer assessment increased by $20/mt to $1,620-$1,630 CFR Brazil, while the

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February 6, 2013

co-polymer assessment rose by $20/mt to $1,640-1,650/mt CFR Brazil. Brazilian FOT export price assessments were left unchanged week on week into the Mercosur region as no change in export prices were reported by market participants. priced Middle East-origin homopolymer was heard offered at $1,680/mt CFR Brazil for 200 mt. Co-polymer from the Middle East was also heard offered at $1,715 CFR Brazil. South African-origin homopolymer product was heard offered at $1,700/mt CFR Brazil.

Polystyrene

Europe Spot prices on the polystyrene market remained in a range between Eur1,500-1,550/mt FD NWE this week as sources said plenty of material was available from non-European sources. Pakistani and Indian product continued to be offered, sources said, along with some Russian product and new material from Egypt’s Estyrenics. Offer prices were reported unchanged from the past week, but sources felt prices could come down in February following a decline in feedstock prices. However, in general, they said the market tendency was difficult to define, given the Chinese New Year break, which tended to distort the supply balance, as well as turnarounds on SM and, possibly, on PS. In the Turkish market, local sources said the best offers were between $2,000-2,050/mt CFR Turkey, with a of $100/mt for HIPS. In upstream news, the styrene monomer barge contract for February was fully settled at Eur1,448/ mt, down Eur40/mt from January, sources said Friday. By Wednesday, PS buyers had received little in the way of proposals from producers, meaning their target would probably be a rollover for the month. In turn, one producer, Styrolution, said it would propose no change to its gross prices for contracted material during February and would maintain a of Eur115/mt for high impact material; a second producer also confirmed it would target a rollover Wednesday. Elsewhere, although one distributor expected the PS contract could see a decrease of about Eur30/mt in February on the back of weaker SM, one large converter was targeting the full monomer -through, namely a Eur40/mt drop, adding: “I have not had any with producers, but that is not unexpected given the fall in the SM price.” Another source noted proposals had been slow to emerge, adding there had been a switch in initiative and that it was now consumers’ turn to come forward to negotiate the price. The market was already being influenced by cracker and aromatic maintenances due in March, which would likely tighten volume in the region. At the same time, one source expected some producers might take PS units offline for maintenance concurrently with the upstream units, but this could not be confirmed. In plant news, a spokesman for Styron reported that the company’s 190,000 mt/yr Tessenderlo, Belgium, plant was running again and close to full spec following an outage on January 26. In other plant news, a customer

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of Total Petrochemicals said the company had formally notified clients of the pending closure of the last remaining UK-based polystyrene plant, the 80,000 mt/yr unit at Stalybridge. “We have been formally notified of the pending closure of Stalybridge, which I have been told will happen rather quickly,” the source, who is a customer of the plant, told Platts Wednesday. A spokesman for Total declined to comment. “This closure is not totally unexpected as it has been rumored for a number of years. I do not anticipate or expect any short-term issues, because I believe this was one of the reasons for some of the de-bottlenecking that took place last year at their French sites,” the source added. On the EPS market, two producers reported they had proposed a rollover of prices amid a need to recoup margins. “Demand from the construction sector is still weak, and we do not see an upturn until March” the source said, adding that most contracts had yet to be settled.

Africa Sources in various parts of the region reported that material from Estyrenics was starting to be offered, because at least three sellers were said to be tendering material. Although one European-based trader confirmed it was looking to sell into most parts of Europe, a source in Spain said he also had been offered the material by an Egyptian-based trader whom he declined to name. In Turkey, another source said a local trader had also been offering the material. However, initial reactions were somewhat mixed as sources reported the initial offer price was too high. The in the Turkish market was said to be as much as $350/mt above the price of cheaper competing material. Meanwhile, another Mediterranean source said the material he had been offered was currently off-spec and not of interest. One of the traders handling the material said supply should be more regular within one or two weeks, but the timing of the offer was proving tough due to the turbulent nature of the PS market, where prices were seen bearish in February but bullish for March.

United States Despite a drop in the feedstock benzene contract price for February, sources said general-purpose polystyrene and highimpact polystyrene domestic contract prices rolled from January to February. Sources cited a higher feedstock ethylene contract price for January, which settled up 3.5 cents/lb to 48 cents/lb, as well as higher feedstock styrene prices for prices rolling over instead of falling. Spot styrene rose 1.80 cents/lb week on week, assessed at 78.20 cents/lb FOB USG Wednesday on supply tightness due to planned turnarounds. Domestic styrene prices were assessed at 78-79 cents/lb FOB US ex-tank, while delivered prices were talked as high as the mid-80s cents/lb. Sources expected styrene prices to remain high until the turnarounds in the US as well as Asia and Europe ended. The feedstock benzene contract price for January settled 36 cents lower than January at 480 cents/gal, sources said. In polystyrene, HIPS was assessed at 123 cents/lb delivered rail car Wednesday, while GPPS was assessed at 112

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February 6, 2013

cents/lb delivered rail car. A distributor source said some spot deals had been heard done as much as 2-3 cents below the contract prices. Supply was heard loosening in the market, which was one reason why sources said prices could lower beginning in March. Demand was described as improving. Despite the increase in demand, the distributor source said there might be some erosion occurring in the market, adding that December 2012 was one of the worst months for sales in 18 months. In the export market, HIPS prices were assessed at $2,215/mt FAS Houston Wednesday, while GPPS was assessed at $2,025/mt FAS Houston. US offers to Peru on GPPS were heard at $2,030-2,040/mt CFR this week, while HIPS offers to Peru were least heard at $2,220/mt CFR. South Korean offers to Peru were heard at $2,210/mt CFR this week for HIPS. No bids were heard this week. A source in Peru said there was not enough product in that market currently. In feedstock styrene production, Americas Styrenics was heard undergoing a turnaround starting in the second half of February and lasting into the first half of March at its St. James, Louisiana, facility, sources said. Americas Styrenics was unavailable to confirm. The St. James facility has a capacity of 2.1 billion lbs/year. LyondellBasell was also heard undergoing a turnaround on one of its propylene oxide-styrene monomer units at its 2.7 billion lbs/year Channelview, Texas, facility. LyondellBasell declined comment.

Asia GPPS: Asian general purpose polystyrene was assessed down $10/mt week on week to $1,860/mt CFR China and down $5/mt to $1,915/mt CFR Southeast Asia Wednesday on the back of weak demand in the lead-up to the Lunar New Year holidays. Taiwan’s Formosa Chemical & Fiber Corp. was heard lowering its offer for GPPS by $30/mt Wednesday to $1,860/mt CFR China. That was a “workable” price level, a trader based in Hong Kong said, adding the retail price for FCFC’s GPPS in the trading hub of Hong Kong was $1,880/mt at the moment. In related news, Hong Kong Petrochemical plans to operate its 140,000 mt/year polystyrene plant in the Yuen Long Industrial Estate at full capacity by Friday or Saturday following a restart this week, a company source said Wednesday. The 70,000 mt/ year GPPS line was restarted Tuesday and the 70,000 mt/ year high-impact polystyrene line was in the process of being restarted Wednesday, the source said. Both were shut February 1 for scheduled maintenance. The company typically shuts the plant for 2 weeks maintenance ahead of the Lunar New Year holidays each year, but some of the work scheduled for this year was completed during shutdowns in the last quarter of 2012, the source said earlier. HIPS: High-impact polystyrene was assessed down $20/mt week on week to $1,930/mt CFR China and down $5/mt to $1,990/mt CFR Southeast Asia Wednesday. Weaker demand saw offers lowered, with Taiwan’s FCFC heard lowering its price Wednesday by $30/mt to $1,930/ mt CFR China. Based on a retail price of $1,960/mt in Hong Kong, it was reasonable, trade sources said. However, feedstock styrene monomer rose $20.50/mt week on week

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to $1,749.50/mt CFR China Wednesday, while co-feedstock butadiene rose $60/mt week on week to $2,010/mt CFR China. EPS: Expandable polystyrene prices were moving in the opposite direction to GPPS and HIPS, rising $20/mt week on week to $1,860/mt for general purpose and up $10/mt to $1,930/mt for flame retardant, both on an FOB Northeast Asia basis. One of China’s major producers, Taiwan-owned Loyal Group, raised its prices $20/mt week on week to $1,860/mt for general purpose and $1,940/mt for flame retardant, both on an FOB China basis, and reported making deals at those levels. However, Xingda Group, the other major producer in China, was offering and selling at $1,870/ mt for general purpose and at $1,930/mt for flame retardant, both on an FOB China basis. Offers from producers in South Korea were heard above $2,000/mt for flame retardant.

Acrylonitrile Butadiene Styrene

Europe As in the polystyrene market, producers of ABS said the outcome of feedstock contracts showed they would target a rollover in contract prices, but sources said there was a rumor that one producer would target an increase for the month. “Although styrene monomer went down, butadiene was a rollover and ACN is treading the same line. So, while there are small variations, they are not extreme, and we are going to go for a rollover,” one seller said. In feedstocks, the styrene monomer barge contract for February was fully settled at Eur1,448/mt, down Eur40/mt from January, sources said Friday. Upstream, the Northwest European February benzene contract price was fully settled at Eur1,040/mt, or $1,408/mt FD NWE, industry sources said Friday. The settlement was a decrease of Eur113/mt, or $121/mt, compared with the January contract price of Eur1,153/mt and $1,529/mt FD NWE, which was the highest-ever settlement. In spot activity, three March parcels were reported traded between $1,735-$1,750/mt FOB ARA as the contango structure between February and March was up $4/mt on the day, from $7/mt Monday to $11/mt Tuesday, on views that March supplies would be scarce in comparison to February as the turnaround season would be in full swing. Meanwhile, butadiene prices continued to tick higher on the FOB market as valuations breached $1,500/ mt FOB NWE for the first time this year. Elsewhere, spot acrylonitrile was assessed unchanged Tuesday, at $1,9301,940 FOB Med, as traders awaited clearer signals from the Asian market. In turn, the Chinese New Year effect had not noticeably caused a surge in Asian ABS imports, according to European sources, which was likely due to even pricier feedstocks in the east. Moreover, February pricing proposals from Asian producers had also not yet been disclosed. In any case, European sources noted a small uptick in demand for February, but sentiment remained uncertain as the auto sector, in particular, showed signs of weakness. turnarounds at cracker level, as well as at a number of styrene monomer plants, could cause a shortage of feedstock

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February 6, 2013

for ABS in March, one source claimed, adding that this could be the reason for the increased demand. In contract news, Spanish-based Elix Polymers said it signed a deal with US distributor Polymer Z to sell its precolored ABS and ABS Specialties products in the North American market.

United States US acrylonitrile-butadiene styrene prices rose 1 cent week on week, assessed at 127 cents/lb delivered rail car Wednesday as feedstocks continued to climb. Price increases of 4-5 cents were implemented by three producers in early or mid-January, with a fourth producer increasing its prices by 4 cents February 1, sources said. Those increases were accepted in the market, sources said. Prices were talked this week around 127 cents/lb delivered rail car, with prices expected to continue rising in February and into March as feedstock prices are expected to remain high. Despite the higher prices, sources said ABS demand had remained fairly stable, with a producer source adding that demand was stronger in February and anticipated to remain that way into March. “The price increases have not deterred demand,” the source added. Supply was heard available in the market. In feedstocks, styrene was 1.80 cents higher week on week at 78.20 cents/lb FOB USG Wednesday on supply tightness due to planned turnarounds in the market. ACN hiked $50/mt week over week, assessed at $2,010/mt FOB USG, tracking increases in propylene. Butadiene was assessed up 2 cents week on week at 83 cents/lb CIF USG Friday as supply has become tighter in that market, sources said.

Asia Asian acrylonitrile-butadiene-styrene was assessed down $10/ mt week on week to $2,040/mt CFR China Wednesday and flat over the same period at $2,050/mt CFR Southeast Asia. Offers were heard at lower levels this week, despite rising costs, due to sluggish demand ahead of the Lunar New Year holidays. Taiwan’s Chi Mei kept its list price unchanged at $2,100/mt CFR China this week, but several market sources said it was going to rebate its customers $50/mt, making the final price $2,050/mt CFR China. The retail price of Chi Mei’s ABS in the trading hub of Hong Kong was heard no higher than $2,020-2,030/mt, while cargoes to arrive after the Lunar New Year were offered at $2,070/mt. The retail price of Taiwan’s Formosa Chemical & Fiber Corp. was heard around $2,010/mt this week, and on Wednesday FCFC was heard slashing its CFR China offer by $40/mt to $2,030/ mt. No significant changes in offer levels were heard from other producers this week and some were not offering as they had sold out February allocations and were not going to offer March cargoes until after the holidays. A South Korean producer said that although his offer at $2,100/ mt CFR China had not yet been accepted by customers, he was forced to raise it for March as costs were increasing. He was likely to offer $2,120/mt CFR China for March cargoes, he added. Looking at feedstock prices, styrene monomer rose $20.50/mt week on week to $1,749.50/mt CFR China Wednesday, while butadiene jumped $60/mt over the same

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period to $2,010/mt CFR China. Acrylonitrile rose $20/ mt week on week to $1,980/mt CFR Far East Asia Tuesday. Based on those feedstock prices and an estimated conversion cost of $250/mt, the break-even price of ABS rose $26/mt from last week to about $2,096/mt.

Polyethylene Terephthalate

Europe European spot prices for polyethylene terephthalate were assessed unchanged on the week, at Eur1,315-1,320/mt FD NWE, as UK prices climbed GBP5/mt, to GBP1,100-1,105/ mt, as converters were reluctant to accept further price increases. February price increases were widely expected due to higher feedstock prices, although weak demand seemed likely to check further increases. Meanwhile, spot prices for recycled PET were assessed unchanged in continental Europe, at Eur975-980/mt, but UK recyclers were able to push prices up slightly, with a rise of GBP5/ mt to GBP790-795/mt. Freely negotiated virgin contract prices saw greater increases than spot prices, reflecting the difference in the expected February settlement amounts expressed by buyers and sellers against the reported January settlement prices. The NWE contract assessment climbed Eur5/mt, to Eur1,310-1,315/mt while the UK assessment increased GBP20/mt to GBP1,100-1,105/mt. Pound sterling prices continued to climb relatively more than UK prices due to the continued weakening of the pound against the euro. The pound sank to Eur1.1567 on Wednesday from Eur1.1633 a week ago and Eur1.1917 the previous week. Four weeks ago, the pound was at Eur1.2269. UK offers were heard as high as GBP1,140/mt, but such levels failed to attract attention and trades were still heard done at GBP1,100/mt. “It may take a while to get all the lower prices out of the market,” a UK trader said. Across Europe, producers maintained that, in addition to recovering increased feedstock costs, they needed to achieve greater margins in order to be profitable. “We need to push through the raw material increase and get more margin. We are still too close to the variable cost,” a producer said. But some converters argued they would not accept price increases and were comfortable waiting to make purchases. “I do not accept any increase, because there is no demand, and I expect PX to collapse in the coming months. I will buy in April because I think it will be cheaper. For now, I am OK with the minimum volumes on my contracts,” a converter said. In turn, the push for higher prices was likely to be difficult. “They [producers] are very ambitious, but I do not see more than a rollover. They struggled to get things up in January. The stocks were there,” another converter said. For now, some buyers seem able to play producers off against each other. “Customers look for any opportunity to buy at lower levels and some succeed as European producers are trying to shift stock. Customers know there is quite a lot of material out there,” another trader said. However, some market participants disagreed over the availability of

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February 6, 2013

material. “Producers do not seem to have much material, because they are not producing 100%,” one converter noted. Meanwhile, production rates for most producers were understood to be in the 80-90% range. Nonetheless, the business would likely remain difficult. “Resin producers are going to be fairly tight on margins. They are just holding their heads above water,” a trader said. Overall, demand in the market remained weak. Although competitive imports were not currently being widely offered, those that were offered earlier have, because of shipping time, affected current demand in Europe. “Imports arriving now, booked late Q4 2012, have dampened the demand; again, it is hard for downstream to absorb price increases, so they either hedge or slow down and work hand-to-mouth,” a producer said. Others agreed that demand was exceptionally weak due to earlier purchases of imports. “The market is a bit weak for the season. A lot of people bought imports in Q4,” another producer said. However, the specter of imports was not totally banished from European producers’ minds. “I expect that a price increase of Eur20 is again feasible given the ‘drop’ in imports at this time, but it may again result in slower offtake, especially if import prices for the end of month into March indicate lower pricing is coming,” the first producer added. Some converters noted that, although imports remained scarce, they were receiving more offers for imported product than in January. In turn, buyers remained hesitant to take advantage of imports at this stage given relatively high prices. “Imports are barely available. I got some offers, but they are for March delivery, which is risky because the prices are not so good,” a converter said. Asian PET rose $20/mt week on week, to be assessed at an 11-month high of $1,585/mt FOB Northeast Asia Wednesday, as strong feedstock markets triggered active spot buying before the Lunar New Year holidays. In Southeast Asia, PET rose $5/mt week on week to be assessed at $1,575/ mt CFR. In feedstock news, the February European contract price for paraxylene was initially settled at Eur1,260/mt FD NWE Tuesday, up Eur15/mt on the January E, sources said. The agreement followed last Thursday’s settlement of the Asian , at $1,685/mt CFR, an increase of $60/mt over January’s A. Some expressed relief that the PX increase was not even higher. “We were expecting even higher PX, so we are happy about that,” one PET producer said. In the spot market, PX fell from last Wednesday’s 16-month high of $1,600/mt FOB ARA, to $1,583/mt Wednesday, tracking Asian price movements. European monoethylene glycol spot prices rose due to a combination of factors, such as firmer Asian prices and the turnaround season in Europe, according to sources. Moreover, the feedstock ethylene contract price for February was settled at Eur1,275/ mt FD NWE, the third consecutive rollover. FCA prices were assessed Eur10/mt higher on the week at Eur910/mt for NWE; CIF prices were assessed at Eur890-900/mt for NWE, gaining Eur10/mt on the week. If the initial settlements were of Eur1,260/mt for PX and Eur1,105/mt, the latter represented a Eur37/mt increase over the January MEG and implied a Eur21/mt increase in PET feedstock costs, to

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the nearest euro. RPET: Prices for hot wash flake were mostly stable as demand was persistently weak. However, UK recyclers have been fortunate to face less competition from their continental counterparts due to the increasing strength of the euro against the pound sterling. “The exchange rate is making European prices relatively higher and I cannot bring stuff over,” one UK converter commented. Recyclers noted the change. “There appears to be a shortage, so prices are improving,” one UK recycler said. Other converters argued that ample flake remained available in the UK and throughout Europe, but conceded that the exchange rate decline had given UK recyclers the opportunity to try to bring prices up. In continental Europe, recyclers were also hoping to achieve increases, but the environment was challenging. “There is a possibility to increase but customers are tough. I think this month we will have a Eur20-30 increase for clear material.” Feedstock prices were heard roughly stable, with increases in some regions for bales of bottles. “ is the only place I know of where prices for bales are increasing, up Eur15-35,” one recycler said.

US US polyethylene terephthalate spot prices were unchanged for the week with Spot DDP US West Coast prices assessed Wednesday at $1,730/mt (78.5 cents/lb). Sources said higher prices for China-origin material had contributed to rising prices in recent weeks, but they seemed to have leveled off this week. Delivered prices to customers on the West Coast ranged from 78 cents/lb to 82 cents/lb, depending on how far east PET was being delivered, sources said. Market players were monitoring prices in Asia, where the PET marker rose to an 11-month high of $1,585/mt FOB Northeast Asia, an increase of $20/mt week on week, with sources attributing increases to higher feedtstock prices and heavier buying ahead of the Lunar New Year holidays. Rising feedstock prices could also contribute to higher US contract prices, with US producers pushing for 4 cents/lb increases for February domestic contracts. US demand was heard to be improving, with Indorama Ventures USA, DAK Americas, M&G Group and Nan Ya Plastics having sent letters to customers notifying them of the feedstock-driven increase. January contracts settled up 3-3.5 cents, and were assessed at 84.75-85.75 cents/lb US railcar ($1,868-1,890/ mt). Producers have pointed to rising raw material costs when seeking increases in recent months. In the feedstock PTA market, sources were monitoring the rising cost of feedstock paraxylene, which continued to put upward price pressure on PTA. January’s PTA contract price was assessed at 67.22 cents/lb ($1,482/mt), but an increase in

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February 6, 2013

February was possible with PX prices at the highest level in 16 months, sources said. February US MEG contracts were assessed at 53.20 cents/lb after US producers implemented 3-4 cent increases for the month. Supplies were heard tight, with turnarounds underway at two plants and four others planned for the first half of 2013.

Asia Asian polyethylene terephthalate rose $20/mt week on week to be assessed at an 11-month high of $1,585/mt FOB Northeast Asia Wednesday as strong feedstock markets triggered active spot buying before the Lunar New Year holidays. In Southeast Asia, PET rose a softer $5/mt week on week to be assessed at $1,575/mt CFR. Offers on an FOB Northeast Asia basis were heard at $1,590/mt, while selling interest on an FOB Southeast Asia basis was heard at $1,580/mt. Firm demand from Europe amid a strong euro was seen to have pushed up the price in Northeast Asian more than in Southeast Asia, as European buyers typically buy Northeast Asian material, particularly South Korea-origin cargoes. “Lots of end-s expected the Asian PET market to become weaker before the Lunar New Year holidays, but it turned out to be the opposite because of strong feedstock markets and buyers are now snapping up cargoes before the holidays,” a trader said. Most market participants, especially those in China, will be absent from trading next week for the Lunar New Year holidays. Feedstock markets turned strong this week, with the CFR China purified terephthalic acid marker rising $15/mt week on week to be assessed at $1,205/mt, and the CFR China monoethylene glycol marker rising $7/mt to $1,188/mt over the same period. But market sources said the rise in the Asian PET market would likely be limited due to ample supply. “February is a strong demand season so the PET market is going up,” a market source. “But considering the current oversupply situation, the price increase will be short-lived.” As a result, the Asian PET margin remained negative Wednesday. The margin turned positive at plus $0.66/mt on January 23 but quickly flipped back into negative the following week. On Wednesday, the Asian PET margin was pegged at minus $5.22/mt compared to minus $9.94/mt last Wednesday in Northeast Asia and minus $15.22/mt compared to minus $4.94/mt in Southeast Asia. In related news, the United Arab Emirates’ JBF RAK has settled its February Middle East contract price for PET at $1,650/mt FD UAE, up $80/mt from January. JBF RAK’s Ras Al Khaimah plant has the capacity to produce 400,000 mt/year of PET. JBF India, of which JBF RAK is an , operates a 150,000 mt/year PET plant in Gujarat, India.

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Polymer Feedstocks: Olefins Polymer Feedstocks – Ethylene

Polymer Feedstocks – Ethylene Glycol Assessments (cont...) US (¢/lb)

Europe FD NWE (Eur/mt) CIF NWE ($/mt) CIF MED ($/mt)

Spot Friday 1140-1145 1510-1515 1470-1475

Weekly Average 1148.0-1153.0 1534.0-1539.0 –

Monthly Contract Price (Feb):

1275-1275 FD NWE (Eur/mt)

US (¢/lb) FD USG

Spot Friday 63.750-64.250

Posted Contract Price (FEB ): Net Contract Price (FEB ):

Weekly Average 65.500-66.000

NA-NA Delivered NA-NA Delivered Spot Friday 1349-1351 1396-1398 1391-1393

Weekly Average – 1395.4-1397.4 1390.4-1392.4

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

Polymer Feedstocks – Propylene Europe (Eur/mt) Poly Grade FD NWE CIF NWE

Spot Friday 1065-1070 1055-1060

Weekly Average 1065.0-1070.0 1055.0-1060.0

Chem Grade FD NWE CIF NWE

Spot Friday 920-925 900-905

Weekly Average – –

Poly Grade Monthly Contract Price (Feb):

1100-1100 Spot Friday dlvd USG 73.000-73.500 75.000-75.500 74.000-74.500

Poly Grade Contract Price (FEB ): Chem Grade Contract Price (FEB ):

Fiber Grade Monthly Contract Price (FEB ): 54.75-55.75 FOB USG Asia ($/mt) CFR China CFR SE Asia

Spot Friday 1177-1179 1175-1177 (1)

MEG Nomination (FEB) – CFR Asia MEGlobal: 1310 Sabic: 1300

Shell: 1300

Weekly Average 1174.8-1176.8 –

Polymer Feedstocks – Butadiene Europe FD NWE (Eur/mt) FOB Rdam ($/mt)

Spot Friday 1240-1250 1465-1475

Weekly Average 1236-1246 1447-1457

Butadiene Monthly Contract FD NWE FEB:

1365-1365 (Eur/mt)

US (¢/lb) CIF USG

Spot Friday 82.50-83.50

Monthly Contract Price (FEB )

76-83

Asia ($/mt)

US (¢/lb) Ref Grade Poly Grade Chem Grade

Spot Friday 54.50-55.50

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

Asia ($/mt) FOB Korea CFR SE Asia CFR NE Asia

FOB USG A/F*

Weekly Average dlvd USG 72.850-73.350 – –

NA-NA Delivered NA-NA Delivered

FOB Korea CFR Taiwan CFR SE Asia FOB Japan CFR China

Spot Friday 1879-1881 1949-1951 1869-1871 (1) 1874-1876 1949-1951

Weekly Average 1865-1867

1923-1925

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

Platts Global Ethylene Prices ($/mt)

Asia ($/mt) FOB Korea CFR Taiwan CFR SE Asia FOB Japan CFR China

Spot Friday 1327-1329 1356-1358 1359-1361 1307-1309 1362-1364

Weekly Average 1310.2-1312.2 – – – 1346.20-1348.20

1,600 CFR FE Asia

FD NWE

FAS Houston

1,500 1,400

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

Polymer Feedstocks – Ethylene Glycol Assessments Europe FCA NWE T2 (Eur/mt) FD NWE T2 (Eur/mt) CIF NWE T2 (Eur/mt) CIF NWE T2 ($/mt)

Spot Friday 905-915 925-935 890-900 1219-1229

Monthly Contract Price (Feb ) – (Eur/mt)

NA-NA

Copyright © 2013, The McGraw-Hill Companies

1,300 1,200 1,100 11-Sep

04-Oct

30-Oct

23-Nov

18-Dec

14-Jan

06-Feb

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

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Ethylene

Europe The European ethylene contract price for February was fully settled Monday at Eur1,275/mt FD NWE. The initial settlement was between a seller, Total, with its customers KemOne and Ineos. This settlement was followed by another between BP Refining and Petrochemicals, with customers Vinnolit, Celanese Ineos. All parties except Total and KemOne confirmed. This was the third-consecutive monthly rollover as the European petrochemicals industry strived for stability amid a low demand and volatile feedstock environment, sources said. Although Brent prices have strengthened, costs to European crackers have been limited on gains in the euro versus the dollar. Brent hit the $116/ mt mark for the first time since October 2012 on increased geopolitical tensions and partly on the back of news that OPEC oil production in January fell to a 15-month low. Average of naphtha in euro and dollar in January was at Eur702/mt CIF NWE and $933/mt, compared to December’s average of Eur715/mt and $938/mt. Naphtha was assessed Friday at $980.25/mt CIF NWE or Eur716/ mt. In the spot market, softness in the polyethylene market was reflected in weaker ethylene prices, according to sources. Bids fell to Eur1,120-1,140/mt FD NWE; offers were at Eur1,150/mt FD NWE. “Incremental demand is non-existent for us. And we have covered ourselves for turnarounds,” one buyer said. Inland prices were assessed at Eur1,140-1,145/mt FD NWE, losing Eur10/mt on the week. In deep -ea news, a Mediterranean producer said he had received offers from traders for material for NWE at $1,200-1,250/mt FOB, adding that had no spare volumes. Despite the weakness in the dollar at $1,500/mt CIF NWE, dollars bids were also lower. “While we might be interested in prompt volumes, deep-sea commitments are unlikely for us,” a buyer said. Prices were assessed $30/mt down on the week at $1,510-1,515/mt CIF NWE. European cracker operators were rampant in booking deep sea volume for the turnaround season beginning March, sources said.

United States US spot ethylene slid 4 cents/lb week on week, assessed Friday at 63.75-64.25 cents/lb FD USG as a steam cracker restart and a slowdown in downstreamm demand appeared to exert downward pressure on prices, sources said. Ethylene was at its lowest levels since January 8, when it was assessed at 62.75 cents/lb, as the market showed prolonged signs of weakening for the first time this year. The market saw its biggest fall in prices Tuesday, when market sources talked of a direct deal heard at 66 cents/ lb for an unknown volume in morning trading. February ethylene was heard talked in a range of 65.75-66.25 cents/lb MtB Wms by close of assessment. Afterward, February was heard traded lower at 65.25 cents/lb for an unknown volume. The trend continued through Friday, when February volumes were heard traded multiple times at 64 cents/lb MtB Wms, at least once via the Houston

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February 6, 2013

Mercantile Exchange for 3 million lbs, and talked afterward in a range of 62.50-66 cents/lb MtB Wms. A day earlier, February trades were heard at 65 cents/lb MtB Wms and lower 64.75 cents/lb MtB Wms after close of assessment. The slide came as BASF-Total restarted its 816,000 mt/ year ethylene capacity steam cracker in Port Arthur, Texas. The restart was confirmed Friday by a company official. The cracker had been in maintenance since January 18, along with the C4 olefins complex at the site. Trader sources in downstream polyethylene markets complained of a slowdown in demand, the result of recent 5-cent/lb increases in contract prices for January. High spot ethylene prices of late were also affecting styrene demand, sources in that market said. In contracts, January could settle up 3-4 cents/lb ($66-$88/mt), lifted by higher spot pricing seen for the month, market sources said this week. Ethylene contracts last settled for December down 0.75 cents/lb at 44.50 cents/lb for the net transaction price and 49 cents/ lb for the posted price. Some called for a more modest increase based on feedstock behavior, as ethylene contract formulas also take into price movements in feedstocks for the month being negotiated. “Paradoxically, feedstock cost dropped rapidly as ethylene prices spiked up, so what we think is contract price ethylene will maybe move only 2-3 cents/lb for January,” a source with a major trading firm said. “This is a relief because it won’t impact the ethylene contract buyers as much.” Spot ethylene as assessed by Platts averaged 64.74 cents/lb in January, up 8.9 cents/lb from December. Spot ethane, meanwhile, averaged 23.45 cents/gal for the same period, down a halfcent from December. In feedstocks, spot ethane rose 1.75 cents/lb week on week to close Friday at 26.15 cents/gal, while propane jumped 2 cents/gal to 88 cents/gal non-LST Mt Belvieu. Cracker margins using ethane as feedstock were estimated Friday at 45.50 cents/lb, while propane was yielding an estimated 56.50 cents/lb, the latter a record high, according to Platts data.

Latin America In contracts, February ethylene prices in Latin America were expected to be stable following a rollover in the NWE ethylene contract. The NWE ethylene rolled over for the third consecutive month at Eur1,275/mt FD NWE for February. In spot, trade was thin this week with sources reporting that Pemex was currently committing its material to downstream demand versus outright arbitrage sales into NWE. As well, little activity was seen in Brazil and no confirmed spot deals were reported this week. In production news, a source at Brazil’s Braskem said that domestic steam cracker production was at 94-95% operating capacity and no maintenance activity is expected in the first half of the year. Downstream, polyethylene pricing strengthened on tightening supplies and higher offers from Asia and the US. There were continued reports of product hoarding in the hopes of selling at higher prices in February in the region. For February, Braskem was expected to increase pricing in Brazil by $100-$120/mt while US producers also continue

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to try to push through price increases. For February, Latin American market participants expect US producers to increase prices by $60-$80/mt. Downstream regional trade is expected to slow as a result of the Carnival Festival starting in Brazil on February 9.

Asia Asian ethylene prices rose $2/mt week on week to $1,392/ mt CFR Northeast Asia and $1,397/mt CFR Southeast Asia Friday amid thin trading activity. The FOB Korea marker was assessed at $1,350/mt Friday, unchanged from a week ago. Bids were heard at $1,350-1,380/mt CFR China against offers at $1,400-1,430/mt CFR China. In Taiwan, bids was heard at $1,370-1,380/mt CFR Kaohsiung against offers at $1,420/ mt CFR Kaohsiung. Three deals were heard this week at $1,380/mt CFR China, $1,390/mt CFR China and $1,420/mt CFR China, but details could not be confirmed. Meanwhile, Japan’s Sumitomo Chemical will permanently shut its 415,000 mt/year ethylene plant at Ichihara, Chiba, during or before September 2015, the company said Friday. The “ethylene plant has been in operation for longer than 40 years now, and its competitiveness is falling behind in of energy efficiency, and maintenance and repair costs to be incurred,” it said. The company will thereafter procure all of its requirements of ethylene and other basic petrochemical feedstock from Keiyo Ethylene, which operates the newest and largest production facilities in Japan. Keiyo Ethylene has a naphtha-based steam cracker at Chiba which can produce 700,000 mt/year of ethylene and 400,000 mt/year of propylene. Keiyo Ethylene is a t venture comprising Maruzen Petrochemical (55%), Sumitomo Chemical (22.5%) and Mitsui Chemicals (22.5%). In South Korea, producers were heard to be tight on ethylene and were only focusing on the domestic market. In Southeast Asia, a offer indication was heard at $1,430-1,450/mt CFR. But market activity was thin in the region. Meanwhile, Malaysia’s Optimal Olefins plans to shut its gas cracker at Kertih from early September to mid-October for a safety inspection, a company source said Friday. The cracker can produce 600,000 mt/year of ethylene and 95,000 mt/year of propylene.

Ethylene Glycol

Europe European monoethylene glycol spot prices rose due to a combination of factors, such as firmer Asian prices and the turnaround season in Europe, according to sources. Moreover, the feedstock ethylene contract price for February was settled at Eur1,275/mt FD NWE, the third consecutive rollover. In the MEG spot market, offers climbed to Eur910-930/mt FCA NWE. “There were requests for product this week,” a producer said; a distributor added: “There are some antifreeze producers with tank space.” PET producers were also in the market for stock building before the commencement of the turnaround season in Europe. Shell’s 305,000 /mt year ethylene oxide plant in Moerdijk, the

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February 6, 2013

Netherlands; BASF’s 500,000 mt/year EO plant in Antwerp; and Ineos’ 450,000 mt/year EO plant will shut for six weeks maintenance in March, end of April and April, respectively. FCA prices were assessed Eur10/mt higher on the week to Eur910/mt for NWE. In the bulk market, a Mediterranean producer reported selling to South Europe at Eur900/mt CFR and was reported offering ex-tank at $1,200/mt; other sellers also agreed to sell at Eur900/mt CIF NWE. “Barge prices are catching up to truck prices, showing there is more legroom for FCA prices to expand,” one source said. CIF prices were assessed at Eur890-900/mt for NWE, gaining Eur10/mt on the week. Asian monoethylene glycol gained $9/mt week on week, to close at $1,178/mt CFR China Friday, as sellers also took long positions in the face of maintenances, sources said. In the DEG market, a trader reported exporting out of Europe to South America, adding: “South America offers better net-backs from Europe than from the USA.” Meanwhile, one buyer reported purchasing at Eur870/mt CIF NWE. FCA offers were heard at Eur900/mt for NWE. DEG trading also posted improvements this week, sources said. FCA prices were assessed Eur20/mt higher on the week to Eur880-890/mt for NWE. In Turkey, sources said supply fundamentals were weaker compared to Europe on the back of Iranian product inflow. “We hear delivered prices as low as $1,150-1,200/mt,” a source said. In other downstream news, PET spot prices moved lower by Eur10/mt to Eur1,315-1-320/ mt FD NWE. Sources said that firmness in MEG and DEG was mostly supply-driven as end- demand remained cautious for the medium term on economic uncertainty.

United States February US MEG contracts were assessed Friday at 55.25 cents/lb, up 2.05 cents from January after US producers implemented 3-4 cent increases for the month. Supplies continued to be heard tight, with turnarounds underway at LyondellBasell’s 675 million-lbs/year facility in Bayport, Texas, (21 days) and Huntsman’s 620 million lbs/year facility in Port Neches, Texas, (55 days) according to industry sources. Market sources also said Indorama’s 615 million lbs/year facility in Clear Lake, Texas, is currently running at reduced rates because of catalyst problems. Sources have said at least four other turnarounds are planned for the first half of 2013. Limited bids and offers were heard for spot material, with sources saying few to no deals were getting done in the tight market. “US spot barges are thin, probably because the shutdowns were planned and volumes [were] already set up to cover normal demand,” a trader source said. Spot prices were assessed Friday at 55 cents/lb FOB USG, with sources saying that prices could rise later in February if demand rises. Demand was heard to be normal for the time of year, with market players waiting for the PET bottling season. A US source said that the arbitrage window from the US to China was closed. In Asia, MEG prices were assessed at $1,178/mt CFR China, up $9/mt week on week and $1,176/mt CFR Southeast Asia, up $7/mt week on week, with Asian traders heard taking long positions with the expectation that prices might rise after

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the Lunar New Year. Downstream, US PET producers have announced 4 cents/lb increase for February after January contracts settled earlier this week up 3-3.5 cents/lb. Despite seasonably low demand, producers have said increases are necessary due to rising costs of raw materials.

Asia Asian monoethylene glycol gained $9/mt week on week to close at $1,178/mt CFR China Friday, and was up $7/mt week on week to $1,176/mt CFR Southeast Asia, with some traders heard to be taking long positions. Notably, offers were trending higher during the week with few bids heard. “That’s because the end-s have sufficient inventory now, that’s why there are fewer bids in the market,” a Chinese trader said. “Most of these bids are from traders who are building up their long position in anticipation that prices might rise after the Lunar New Year in mid-February,” the trader added. Meanwhile, downstream demand was heard to be slipping, with plants heard to be operating at lower run rates. “Eventually, they will all be shut as we approach the Lunar New Year, that’s why I expect MEG prices to remain fairly stable over the next few weeks,” a Southeast Asian trader said. In China, state-owned Sinopec nominated its February Price for MEG at Yuan 9,200/mt ($1,138/mt), unchanged from January, sources close to the negotiations said Friday. In Taiwan, Nan Ya Plastics plans to restart its 350,000 mt/year No. 2 MEG line at Mailiao February 6, a company source said Friday. The No. 2 line was shut on Wednesday, as planned, after the temperatures of the No. 1 and No. 2 lines were found to be abnormally high, Platts reported previously. “It’s a small technical problem and we are fixing it now,” the source said. “There shouldn’t be much impact to the market in of MEG prices,” the source added. The 350,000 mt/ year No. 1 MEG line will have to be shut after the No. 2 line is restarted next Wednesday if the technical issue cannot be resolved, according to the source. Meanwhile, the No. 1 line is operating at 78% of capacity, and the 350,000 mt/year No. 3 and 720,000 mt/year No. 4 lines at 90% of capacity, according to the source. In Southeast Asia, MEG was heard to be trading at a slight discount to CFR China. “There are more cargoes coming into Southeast Asia but there are not many buyers,” a Japanese trader said. “Downstream demand in Southeast Asia is low currently,” a Chinese trader added.

Propylene

Europe The February propylene contract price was fully settled Tuesday, at Eur1,100/mt ($1,505/mt) FD NWE, up Eur10/ mt from January. The initial settlement was done between producer Versalis and buyers LyondellBasell and Ineos. It was followed by Shell and SABIC as producers with customer DSM. Versalis, Ineos and SABIC confirmed the settlement, while LyondellBasell and DSM were not available to comment. Shell did not confirm. The latest settlement,

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February 6, 2013

which ended four straight months of declines, was well within market expectations of a rollover to a modest increase, mainly reflecting the modest movement in naphtha, fragile polypropylene demand and tight supply brought about by cracker issues, sources said. “We are trying to strike a balance between C2 and C3. We are concerned about polypropylene. There is no structural alteration in PP demand, so any sharp [movement] could possibly choke off the [improvement] we are seeing,” a producer said. At the time of the settlement, naphtha averaged $928/mt CIF NWE in January, down $10/ mt from December. It closed at $980.25/mt Friday, up from $948.50/mt a week ago. The spread between ethylene and propylene s narrowed slightly in February after reaching record levels in January, Platts data showed. The gap reached Eur185/mt in January, the widest seen since the industry began settling contracts on a monthly basis, instead of quarterly, in January 2009. It eased slightly to Eur175/mt in February after the ethylene rolled over for the third month in a row at Eur1,275/mt. Meanwhile, propylene has been on a steady decline, reaching Eur1,090/mt in January, weighed down by oversupply and weak downstream demand, but rebounded in February following cracker issues. The spot market was seen broadly relaxed this week as the February settlement had little effect. There was limited interest heard for February supply, while the tightness brought about by the Lavera outage eased, sources said, although they added that the shortage could still be felt in certain pockets, which could partly explain the imports heading into Europe, even though the arb window was shut. GC Juemme was loading 3,200mt PGP from Houston in mid-February and heading to Western Med/ARA; Stina Kosan was heard loading 4,500-5,000mt next week from Madre de Deus in Brazil, heading possibly to Stade in ; and Maersk Galaxy will be loading 10,000-12,000mt in mid-February from Mailiao, Taiwan, and unloading possibly in ARA. However, most sources were not taking these shipments as an indication of the trend of increasing flow of imports into Europe. The upturn in propylene prices in Asia and the US did not indicate that the arb window was opening soon, sources said, adding that volatile currencies were also hampering these opportunities. US PGP was heard last traded at around 75 cents/lb ($1,653/ mt), adding freight of around $250/mt would mean a landing cost of around $1,903/mt (Eur1,390/mt). In Asia, CFR Taiwan gained $28 Friday week on week to $1,357/mt, after adding freight of around $350/mt, a cargo would cost $1,707/mt or Eur1,247/mt to bring to Europe. The Taiwanese cargo, expected to land in Europe in H1 March, was heard offered at around Eur1,200/mt, sources said, adding that it received a lukewarm response from European buyers. “From the supply perspective, the market will definitely tighten up in MarchApril because of the cracker turnarounds, but I doubt this will translate to a more than Eur100/mt jump in prices,” a consumer said. The corresponding shutdown in derivative plants, combined with shaky end- demand, could ease the impact of crimped availability and also limit the upside in propylene prices, the consumer added. A portion of the cargo was heard already sold, according to some sources said,

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while others felt the shipment could still be diverted to the US, where most Asian products were headed, but this could not be immediately confirmed. The dollar bowed to renewed pressure this week, hitting a 14-month low of $1.3674 against the euro intra-day Friday, on worries over the US economy. In Europe, February offers were heard at par with the February , but most sources said this could not be justified in the current market. “There is no interest for additional materials at M, because we can not sell that downstream and do not have margins,” a consumer said. Most sellers were bullish on prices on the back of the Lavera outage and the strike at SABIC’s Geleen site. However, sources said the SABIC strike had not impacted market supply. The strike, which began Thursday, reduced SABIC’s cracker and polymer production at Geleen. The two crackers, which produce 1.25 million mt/year of ethylene and 725,000 mt/year of propylene, “are still running but at reduced levels,” a source said, adding that one of the five PP plants, which have a combined output of 620,000 mt/year, was down. “The crackers and polymer plants are [running at] reduced [levels]. But this has no significant impact on our deliveries,” the source added. Geleen also produces 940,000 mt/year of polyethylene.

United States US spot propylene prices rose nominally week on week, as producers nominated steep increases for February contracts. The spot refinery-grade propylene assessment inched up a quarter-cent, assessed Friday at 73-73.25 cents/lb delivered in a subdued market that reported little activity. The spot polymer-grade propylene also rose 0.25 cents/lb, assessed at 75-75.50 cents/lb delivered, slightly lower than where it traded midweek after it was last heard talked for February in a range of 74-75.625 cents/lb MtB pipe. A 3 million lb volume of PGP was heard traded in the futures market at 75.50 cents/lb FOB MtB via the Houston Mercantile Exchange, and one source said that is where physical propylene was expected to trade at next. Platts does not consider futures deals in its assessment. Spot PGP was heard traded midweek at 75.75 cents/lb, 76.50 cents/lb and 76.50 cents/lb MtB pipe before being heard talked lower on Thursday. No bids, offers or deals were heard Friday. Spot RGP was heard traded Wednesday for an unknown volume at 73.25 cents/lb MtB pipe. It was heard bid at 68 cents/lb MtB pipe on Thursday and 69 cents/lb Mtb pipe on Friday, with no other deals heard. Sources said the tight spread between RGP and PGP, usually 7-10 cents/lb, was likely not sustainable, but itted that weaker demand for PGP from polypropylene and other downstream markets was likely helping to balance the PGP market. Talk in the market this week centered around contract price negotiations. February contracts could rise 5-7 cents/lb, driven by stronger spot prices across grades, sources said this week. ExxonMobil Chemical on Thursday was heard revising its increase nomination for February PGP contracts up 2 cents/lb to 9 cents/lb. The revision was expected after a second major propylene producer, Shell Chemical, nominated a 9-cent/lb hike for chemical-grade propylene

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February 6, 2013

earlier this week. “It’s no surprise that they would follow Shell,” a trading source with an olefins producer said. A second trading source deemed the nominations as “aggressive,” as these came less than two weeks after the market witnessed prices settle at a 15-cent/lb increase. PGP settled for January at 73 cents/lb delivered, while CGP settled at 71.50 cents/lb. These were the highest levels since April, 2012, when contracts settled at 77.50 cents/ lb and 75.50 cents/lb, respectively. Dow Chemical CFO William Weideman, whose company is a major buyer of propylene, said prices were projected to go up “another 5 cents/lb” while on an earnings call Thursday. Propylene has strengthened on the back of recent planned and unplanned outages at steam crackers and refineries, sources said. In production news, BASF-Total’s steam cracker and C4 olefins complex in Port Arthur, Texas, were nearing normal rates, two days after the plants restarted from a two-week turnaround, company sources said Friday. “Operations have resumed for the steam cracker and the C4 olefins complex at the BASF-TOTAL Petrochemicals LLC site in Port Arthur,” BASF communications manager Donna Jakubowski said Friday. Restart processes at the 816,000 mt/ year ethylene capacity cracker began earlier this week. The plant has a listed propylene capacity of 862,000 mt/year, according to Total Petrochemicals USA.

Latin America February propylene contracts in the region could post gains, pressured higher by a slight increase in the February NWE contract as well as expectations of an increase in the US contract. The Feb NWE contract settled up Eur10/ mt to Eur1,100/mt FD NWE while participants in the US anticipated increases of anywhere between $88-$154/mt. The Brazilian contract market generally traces movements in the European and US markets. There was little change in fundamentals and sources reported steady demand this week. On the supply side, availability remained limited in Mexico stemming from production interruptions at Pemex’s Salina Cruz 330,000 barrels/day refining complex early December in Oaxaca and its Minatitlan 245,000 barrels/ day refinery complex in Veracruz. In Brazil, production was characterized as stable with Braskem reporting no planned maintenance for the first half of the year. In spot, the market was largely stagnant this week with no confirmed deals reported. In the downstream polypropylene markets, homopolymer prices were heard higher out of US and Asia. Asia-origin homopolymer offers for undisclosed volumes were heard into Peru this week at $1,650/mt CFR though buy interest was thin. Similarly, US material was unworkable as prices continued to climb on higher monomer costs. The US price this week was assessed at $1,620-$1,642/mt FAS Houston. In Brazil, Braskem was expected to increase homopolymer pricing by at least $200/mt for February. In other news, an explosion occurred in Pemex’s headquarters complex in Mexico City Thursday killing 32 and injuring more than 100. The company has not determined the cause and could not be reached for comment.

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Asia Asian propylene prices rose for the sixth consecutive week as traders took positions in anticipation of tight supply in March. The FOB Korea and FOB Japan markers were assessed Friday at $1,328/mt and $1,308/mt, respectively, up $33/ mt and $43/mt week on week. The CFR China and CFR Taiwan markers both gained $28/mt over the same period to $1,363/mt and $1,357/mt. A H1 March loading cargo was traded late Monday at $1,330/mt FOB Korea, while a similar cargo was traded Wednesday at $1,320/mt FOB Korea. An unconfirmed H2 March loading cargo was traded Tuesday at $1,340/mt FOB Korea, while an unconfirmed March 21-31 loading cargo was traded Wednesday at $1,350/mt FOB Korea. Participants said traders were securing March cargoes due to anticipated supply tightness in March. South Korea’s SK Innovation plans to shut its No. 1 naphtha-fed steam cracker at Ulsan for a month of maintenance over March-April. The No. 1 cracker is able to produce 200,000 mt/year of ethylene and 140,000 mt/year of propylene. The startup of new downstream plants also tightened supply, sources said. Taiwan’s Formosa Petrochemical plans to shut its No. 2 residue fluid catalytic cracker for a turnaround from mid-March to mid June. The No. 2 RFCC can produce 375,000 mt/year of propylene. In China, Japan’s JX Nippon sold a 1,500 mt H1 March-loading propylene cargo to a trader Thursday at $1,360/mt CFR East China or $1,365/ mt CFR Taixing on the buyer’s option. The company sold another similar cargo to a trader Friday at $1,370/mt CFR East China or $1,375/mt CFR Taixing on the buyer’s option. Two H1 March arrival cargoes were heard traded this week at $1,351/mt CFR China, but the counterparties could not be confirmed. Bids were at high $1,360s/mt CFR China on L/C 90 days credit Friday, up more than $20/ mt from last week, while offers were at $1,380-1,400/mt CFR China on similar credit . A Chinese end- bid for H1 March arrival cargoes at less than $1,350/mt CFR China but received offers at $1,400/mt CFR. In Southeast Asia, propylene prices were assessed at $1,360/mt CFR Friday, up $20/mt from a week earlier. Discussion for March cargoes has yet to start but the market was tight, producers and traders said. “[Prices in Southeast Asia are] almost the same as Northeast Asia,” a Japanese trader said. Indonesia’s Pertamina has shipped the first propylene cargo of 1,500 mt from its new RCC Off Gas to Propylene Project (ROPP) at Balongan to Chandra Asri Petrochemical, Pertamina said Wednesday. The new plant, with a production capacity of 179,000 mt/year of propylene, began operations on January 14. It converts residue catalytic cracking resulting from the exhaust gas utilization projects into high value-added propylene. Upstream, front month ICE Brent crude futures were assessed Friday at $115.74/barrel at 4:30 pm Singapore time (0830 GMT), up $2.46/b week on week. In market news, Japan’s Sumitomo Chemical will permanently shut its sole naphtha-fed steam cracker at Chiba, eastern Japan, during or before September 2015, the company said Friday. The “ethylene plant has been in operation for longer than 40 years now, and its competitiveness is falling behind in

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February 6, 2013

of energy efficiency, and maintenance and repair costs to be incurred,” it said. The naphtha-fed steam cracker can produce 415,000 mt/year of ethylene and 288,000 mt/year of propylene.

Butadiene

Europe Although market sources anticipated a drying up of export cargoes, news of three fresh fixtures was received this week, all bound for US export. One parcel was all crude C4, the other two were mixed. The Happy Bee was confirmed fixed by a trader, who declined to be named or add further details. Another trading source said the cargo consisted of 2.1 kt of crude C4 and 2.1 kt of butadiene. The ship was scheduled to leave early February, sailing ARA to Houston, sources said. The other sailing was reported fixed by producer Evonik, with a mixed cargo of butene-1 and butadiene, although the breakdown was not clear. The date was reported as midFebruary, also between ARA and Houston. A spokesman for the company declined to comment. Other trading sources said they continued to seek opportunities to sail material into Asia but had been restricted by the amount of volume available in Europe. “It is very hard to get together the kind of volume, say, 5,6 or 7kt, that is worthwhile for a deal to the Far East,” one said. Price levels in Asia would still permit material to be loaded in Europe at a price between $1,450/ mt up to $1,500/mt FOB, a level where the best offers in the marketplace were seen this week, but sellers said they would hold out for $1,500/mt FOB NWE, or even higher, where possible. Meanwhile, buyers itted they had raised their bid levels from the previous week to secure volumes, but none would confirm traded levels for the export material. As the Asian market still traded around the $1,900/mt FOB level and the US market was seen rangebound, despite the lack of adequate volume on offer in NWE, sources continued to consider both arbitrages open. In turn, they still saw fair value between $1,450-1,500/mt FOB. On the inland market, producers were still reluctant to see too much material taken out of the region below contract price levels. Moreover, demand was reported robust for February, as downstream buyers, encouraged by the rollover in contract prices, took full volumes. With the Lavera, , unit still reportedly out of operation, other producers were happily mopping up spare volume from customers in the region, while companies that were short were reported to still be active on the spot markets for all C4 products. In traded activity, a buyer reported buying 200-250 mt at a price of Eur1,242/ mt DDP NWE on railcars, although the seller declined to comment. Elsewhere, a seller reported a second deal, for 500 mt, at a price of Eur1,300/mt FD Northern Europe for February delivery, but the buyer could not be reached for confirmation. Other sources saw the domestic market largely in line with recent weeks, although offer levels trended higher as sellers realized the lack of availability was caused by existing and outages. Given this, on

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the supply side, sources said output from SABIC’s Geleen unit had been affected by a labor-related strike at the site. A company source told Platts that the two steam crackers at the site, which produce 1.25 million mt/year of ethylene and 725,000 mt/year of propylene, “are still running, but at reduced levels.” As a result, sources said the company had stopped offering C4 products on the spot market, but contract volumes were not reportedly affected. In other plant news, a Repsol spokesman was unavailable to confirm production at the company’s 45,000 mt/yr Sines butadiene unit, which was take offline in December. In downstream news, tire maker Goodyear Dunlop Tires Europe announced plans Thursday to close the Amiens Nord plant in and exit the farm tire business in Europe, the Middle East and Africa. The plans for the plant will result in the loss of 1,173 jobs at the site, dependent on talks with the European central works council and the French unions, the company said in a statement. There was currently no timetable or target date for the closure. Other farm tire production sites in Europe were also seen under threat, because Amiens Nord s for only 60% of the company’s farm tire production in the EMEA region. The crude C4 market was moving rangebound this week following strong increases earlier this month. However, trading sources reported that volume was becoming tougher to find, meaning export opportunities would lean more toward the US than Asia, due to the possibility of fixing smaller vessels. Meanwhile, the Chinese New Year celebrations also helped traders focus more on the Atlantic routes, sources said. In turn, shipping sources reported a 2.5 kt package due to ship out early February aboard the GC Izar with Houston as the destination. The company handling the deal was reported to be Kolmar but the company declined to comment. A second sailing was also confirmed by the trader, who asked not to be named, aboard the Happy Bee. Other sources said the volume of crude C4 involved was 2.1 kt, but this could not be confirmed along with the price of the transaction. On the inland market, a 1 kt parcel was reported by the seller at a price of 1.06 factor to naphtha, which the buyer declined to confirm. In plant news, the market was preparing for turnarounds at Shell’s 940,000 mt/year cracker in Moerdijk, in the Netherlands, which would undergo planned maintenance for six weeks beginning in March, and at BASF’s 1.08 million mt/year cracker in Antwerp, which will begin a two-month planned maintenance in the second half of April. As domestic butadiene and crude C4 values steadied this week, along with a muted outcome for olefins, raffinate-1 continued to be seen in a similar range to the past two weeks. On the export market, shipping sources reported a sailing of Butene 1 aboard the Norgas Patricia, sailing from ARA to Houston in mid-February, with Evonik named as the vessel’s charterer. In traded action, one seller reported agreeing a deal for an unspecified amount at a factor of 1.22 times naphtha on a CIF NWE basis, without naming the buyer. A second deal was reported for delivery of 1,000 mt, transacted at a level of 1.27 times naphtha on a CIF Med basis, both buyer and seller confirmed.

Copyright © 2013, The McGraw-Hill Companies

February 6, 2013

Meanwhile, other sources reported that material remained tight in the region due to the shutdown at Lavera, , the industrial action at Geleen, the Netherlands, and also the impending turnarounds for other units, which would start tightening the market. The continued export of crude C4 to the US was also keeping the market tense, according to sources, as at least 4.6 kt of crude C4 had been booked for departure in February. Downstream, demand continued to be reported strong for derivative products, especially following the rollover on a lot of petrochemical, which gave manufacturers and other industry some breathing space to return to normal operations.

United States US spot butadiene was assessed 2 cents higher on the week at 83 cents/lb CIF USG Friday as supply continued to tighten in the market. Sources notionally talked prices from 80 cents/ lb CIF USG to the mid 80s cents/lb CIF USG, with a trader adding that the last deals done were at 82 cents/lb CIF USG. Sources said the increase in price had nothing to do with demand, which was still described as weak, and everything to do with the supply side. Supply has gotten tighter in the market due to cracker outages along the US Gulf Coast along with producers running at reduced rates due to sluggish demand. BASF-Total shut its steam cracker and C4 olefins complex at its Port Arthur, Texas, facility on January 18 for 2-3 weeks for planned maintenance, but restarted the facility at the end of January, a company source said Friday. The integrated C4 olefins complex can make 900 million lbs/year (408,000 mt/year) of butadiene via an extraction process. Sources also said European export product has dried up, and the US was not expected to import product from Asia. Sources said if demand picked up, then prices could climb at a faster rate. “The demand side is not looking rosy right now, but if demand picks up, it will hurt with supply as tight as it is,” a second trader said. Prices were expected to continue rising due to the limited supply, but sources said Crude C-4, which is a feedstock for butadiene, was also getting expensive. “If crude prices continue to go up, it will push butadiene up,” the first trader said. European Crude C-4 was assessed Friday at $1,058-1,060/mt CIF NWE, with a factor of 1.08. The tightness in supply comes despite two butadiene shipments and two Crude C-4 shipments arriving in the US in January. Two more Crude C-4 cargoes were heard headed to the US Gulf for early to mid February. A 2,500 mt parcel, and European sources said a 2,100 mt parcel was headed to the US Gulf. The 2,100 mt parcel size could not be confirmed by time of publication. A shipment of butadiene was also heard headed to the US, but sources said the parcel was contract. In contracts, the February US butadiene contract price settled in a rollover from January at a 76-83 cents/lb split settlement, sources said. TPC Group, Shell Chemical and LyondellBasell settled at 76 cents/lb, while ExxonMobil settled at 83 cents/lb, sources said. Producers were unavailable to confirm. Sources expect the March US butadiene contract price to rise due to increases in the spot market, with sources estimating a 5-7 cents/lb increase currently.

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Platts Polymerscan

Latin America The January butadiene contract in Brazil was talked near $1,906/mt. Braskem looks to the US butadiene market for customer pricing. The US butadiene contract price settled Monday at a rollover from January at 76-83 cents/lb ($1,676$1,830/mt) as expected in a tight supply environment, sources said. Some Braskem customers will pay a discount / to the US contract butadiene price. Brazil’s Braskem reported domestic butadiene production as stable, a source with the company said. Two cargos of butadiene were reported in a shipping report entering the port of Altamira, Tamaulipas, Mexico, of US-origin (2,600 mt) and Brazilian-origin (1,900 mt). Details about the shipment were not available by press time. Mexico historically has exported crude C4, it is refined abroad, and then it is imported as butadiene. The Mexican petrochemical port of Altamira was closed Wednesday due to poor weather conditions, while the Pajaritos crude oil and petrochemical shipping port was closed Wednesday and Thursday, according to the Mexican Secretartiat of Communications and Transportations.

Asia Butadiene prices were higher Friday from a week ago on expectations that demand from China will pick up after the Lunar New Year holidays. A trader said his buying idea for H2 February-loading or March-arrival cargoes was $1,950/mt CFR China, while another trader received a firm bid in the low $1,900s/mt. A trader based in China said discussion levels hovered at $1,950/mt to $1,980/mt CFR. But due to market uncertainty, buyers preferred a floating price to reduce their risk to volatile prices. Most sellers also opted for a floating price, anticipating that spot prices will rise after the Lunar New Year holidays which start February 10. South Korea’s YNCC sold two any-March loading cargoes at $1,900/mt and $2,000/mt FOB Korea, most likely for the middle to latter part of the

Copyright © 2013, The McGraw-Hill Companies

February 6, 2013

month, which is just outside the 20-40 day period used for assessment by Platts. India’s Haldia Petrochemical had offered 1,500 mt of H2 February butadiene via a restricted tender but the result was not known by market close as the tender closed Friday. The CFR China benchmark for butadiene was up $90/mt week on week at $1,950/mt, while its FOB Korea counterpart gained $35/mt to $1,880/ mt. But price increases were restricted as synthetic rubber producers struggled to cope with the rise in feedstock butadiene costs. Several producers have either shut or plan to cut rates to cope with the costs as well as high inventory levels and poor margins. For example, China’s Shen Hua Chemical Industrial shut its butadiene rubber plant at Nantong Friday, citing high inventory and poor production margins, a company source said. The 72,000 mt/year BR plant will be shut for about 35 days. Due to similar reasons, Shen Hua will reduce the operating rate of its 200,000 mt/year styrene-butadiene-rubber plant to 90% of capacity on February 6, down from a current 100%. The decision to stop BR production and cut SBR runs was taken amid weak demand from local tiremakers. Meanwhile, South Korea’s Lotte Chemical plans to use up to 10% of LPG as steam cracker feedstock from Friday, compared with just naphtha currently, to cope with rising naphtha prices. Butane raises ethylene and propylene yields, compared with naphtha, but results in a fall in butadiene production. Lotte Chemical operates a 130,000 mt/year butadiene extraction unit at Yeosu. In turnaround news, Taiwan’s TSRC plans to shut its 100,000 mt/year SBR plant at Tashe, Kaohsiung, early April for scheduled maintenance, a company source said late Wednesday. The program is expected to take about three to four weeks to complete. TSRC also operates a 60,000 mt/year butadiene rubber plant at the same location, which is running at about 80% of capacity due to poor production margins. The plant is due for planned maintenance in September.

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February 6, 2013

Polymer Feedstocks: Aromatics Paraxylene

Europe

Polymer Feedstocks – Aromatics Weekly Average Spot*

European paraxylene prices were assessed Friday at $1,584/mt FOB ARA, down $6/mt, tracking a similar move in Asia. During the week, the market climbed $9/ mt from the past Friday’s assessed level of $1,575/mt. Despite a rise in European feedstock MX prices, the NWE PX market fell. As xylenes spot prices were assessed at $1,330/mt, up $25/mt from the past week, the MX-PX spread was at $254/mt, considered by some industry sources to be above break-even levels. Meanwhile, some European trader sources felt that, given the absence of good demand from the PTA sector, as well as the weakness of derivative production economics, any available spot cargoes would need to be pricing in the mid-$1,500s to achieve a profit margin. “No one would dare take a cargo into Asia at the moment,” one trader said. However, as PTA economics were weak, most sources agreed producers would be running at reduced rates. Moreover, with the Petkim Aliaga PTA plant back in production, sources said supply would be snug. Overall, the market was largely still awaiting the conclusion to the NWE contract price negotiations, after the Asian was settled by a number of producers and consumers at $1,685/mt FOB Korea. One producer involved in the negotiations expected the to settle Monday at the earliest. Some sources suggested the surge in the value of the euro versus the dollar had made negotiations tough, because European consumers and producers were disadvantaged when looking to supply into Asia. The Asian paraxylene market was assessed at $1,679.50/mt FOB Korea and $1,704.50/mt CFR Taiwan/ China Friday, down $6/mt from Thursday but up $12.50/ mt on the week.

Styrene FOB Korea ($/mt) Styrene FOB Rdam ($/mt) Styrene FOB USG (cts/lb)

1694.40-1695.40 1730.60-1731.60 75.85-76.35

Paraxylene FOB Korea ($/mt) Paraxylene FOB Rdam ($/mt) Paraxylene FOB USG ($/mt)

1686.90-1687.90 1589.80-1591.80 1605.00-1615.00

Monthly Contract Price Styrene Styrene Styrene Styrene Styrene Styrene

Barge AVG (Eur/mt) (Feb) 1448.00 Barge FD NWE (Eur/mt) (Feb) NA Barge FOB R’dam (Eur/mt) (Feb) NA Barge FOB ARA (Eur/mt) (Feb) 1448.00 Truck FCA Rdam (Eur/mt) (Feb) 1448.00 FOB USG (cts/lb) (Feb) 78.00-79.00

Paraxylene CFR Asia Average (Feb) Paraxylene FD NWE (Eur/mt) (Feb) Paraxylene FOB USG (¢/lb) (Jan)

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

US Styrenics Prices 120

($/mt)

US spot paraxylene climbed $40/mt week on week, assessed Friday at $1,630/mt FOB USG, as market talk for March was heard at $1,625-1,660/mt FOB USG. Trading activity for spot PX was relatively quiet this week, and no deals were heard done. According to sources, demand was strengthening due to increasing consumption in downstream PTA. PX prices were driven higher as PTA activity picked up, sources said. The downstream PET market was weak, market participants said, but they expect an increase in demand towards the end of the first quarter when PET units are expected to ramp up production. Asian PX was up $12.50/mt week on week, assessed Friday at $1,679.50/mt FOB Korea and $1,704.50/mt CFR Taiwan/China. The US-Asia arbitrage window remained open on paper, assuming freight rates at $70-80/mt. MSTDP margins were estimated at $130.08/mt Friday, according to Platts data. As MSTDP margins remained positive, it provided an indication that the production of benzene and PX from MSTDP units remained profitable.

Copyright © 2013, The McGraw-Hill Companies

CFR FE Asia GPPS Styrene FOB Korea

100

80

60 12-Sep

United States

1685 NA 80.50-80.50(Q1)#

10-Oct

07-Nov

05-Dec

09-Jan

06-Feb

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

Asia The Asian paraxylene market was assessed at $1,679.50/ mt FOB Korea and $1,704.50/mt CFR Taiwan/China Friday, down $6/mt from Thursday. From a week earlier, the Asian PX market rose $12.50/mt. Buying appetite from end-s remained sluggish Friday as downstream polyester makers have been shutting their factories ahead of the Lunar New Year holidays which start on February 10 this year. Market sources said participants were not seriously trading Friday, with bids and offers far apart. On Friday afternoon, the bid and offer for March was heard at $1,702/mt and $1,725/mt, respectively, on a CFR Taiwan/Ningbo/Dalian basis. During the Platts Market on Close assessment process, offer levels came down, with an offscreen offer heard at $1,710/mt CFR Taiwan/Ningbo/Dalian. No offscreen bids were heard during

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the MOC process. Onscreen, trader China Aviation Oil posted two bids and two offers. CAO posted a March/April bid and offer at plus $3/mt and plus $6/mt, respectively, on a CFR basis. CAO also bid for March on a CFR Taiwan/ Ningbo/Dalian basis against CFR Taiwan/Ningbo at plus $2/mt. CAO also offered for March on a CFR Taiwan/ Ningbo basis at a $6/mt to the February daily average of Platts PX CFR Taiwan/China assessments. No deals were reported Friday. In related news, China’s stateowned Sinopec nominated its February Contract Price for PX at Yuan 12,500/mt, unchanged from its January. On an import parity basis, the February is $1,668/mt. Also on Friday, US-headquartered ExxonMobil settled its February Asian Contract Price for PX at $1,685/mt CFR, $60/mt higher than its January settlement. On Thursday, Japan’s JX Nippon Oil and Energy and South Korea’s S-Oil also settled their February PX As at $1,685/mt CFR. Japan’s Idemitsu Kosan did not settle for February. In plant news, PetroChina plans to start up its 680,000 mt/year PX plant in Sichuan, China, in the second quarter of this year. Asian isomergrade mixed xylenes inched down $2.50/mt day on day to $1,384.50/mt FOB Korea and $1,401.50/mt CFR Taiwan Friday. Week on week, the market rose $9.50/mt. Despite US MX prices increases on Thursday, the Asian isomer-MX market was on a downtrend Friday, pressured by strong selling intention and a weaker downstream paraxylene market. But the drop was limited due to the rollover of the laycans amid a contango structure. US isomer-MX FOB Gulf Coast was up 5 cents/gal ($9.09/mt) day on day to an intra-week high of 458 cents/gal ($1,387.74/mt) Thursday. The Asian PX market was assessed at $1,679.50/mt FOB Korea and $1,704.50/mt CFR Taiwan/China Friday, down $6/mt from Thursday. From a week earlier, the Asian PX market rose $12.50/mt. During the isomer-MX Platts Market on Close assessment process Friday, no bids or offers were ed. Offscreen, an offer was heard for a March cargo at $1,395/mt FOB Korea initially, and lowered to $1,385/ mt FOB Korea. In comparison, over Monday-Wednesday, China Aviation Oil had actively posted firm bids. The trader posted bids for March isomer-MX at $1,375-1,385/ mt FOB Korea Monday and at $1,385-1,395/mt FOB Korea Tuesday. CAO also placed a bid for H2 February/March at minus $20/mt FOB Korea over the same period. On Wednesday, CAO bid for March/April isomer-MX at minus $20/mt FOB Korea. As a result, the Asian isomer-MX market hit an intra-week high of $1,390.50/mt FOB Korea and $1,407.50/mt CFR Taiwan Wednesday on firm demand and tight supply. In other market news, South Korea’s Lotte Chemical settled a 2013 isomer-MX term buy contract with a South Korean producer, at a of $6-9/mt to Platts FOB Korea isomer-MX assessments, market sources said Friday. The producer will likely supply 30,000-40,000 mt/month, or 360,000-480,000 mt/year, of isomer-MX to Lotte Chemical over January-December 2013, the sources said, but this could not be confirmed with either company. Lotte Chemical previously inked a 2012 isomer-MX term buy contract with the same South Korean producer at

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February 6, 2013

a of $2/mt to Platts FOB Korea isomer-MX assessments, according to industry sources. Lotte Chemical has two plants at Ulsan. One has a nameplate capacity of 200,000 mt/year of paraxylene, 100,000 mt/year of benzene and 60,000 mt/year of orthoxylene; and the other can produce 550,000 mt/year of PX and 150,000 mt/year of OX. Meanwhile, South Korea’s SK Global Chemical plans to shut three out of four NRP reformers at Ulsan mid-May for 40-45 days of scheduled maintenance, a company source said Tuesday. SK Global Chemical has four reformers at Ulsan, which can produce a combined 1.3 million mt/year of isomer-MX, 470,000 mt/year of benzene and 820,000 mt/year of toluene. The Asian isomer-MX CFR Southeast Asia marker was assessed up $9.50/mt week on week at $1,404.50/mt CFR SEA Friday.

Styrene

Europe European styrene monomer spot market remained stable Friday as the focus shifted toward negotiations on February contracts. Spot styrene barges were assessed at $1,728.50/ mt, up $45/mt week on week, as the market shrugged off the continued weakening of the feedstock benzene. Spot discussions were muted as ranges remained $20/mt wide throughout the day. Bids were close to Thursday’s levels, at $1,720/mt for February, $1,730/mt for March and $1,740/mt for April. The structure was quoted at a $5-10/mt contango between February and March as supply was expected to shrink in March amid turnarounds. However, one buyer said February looked well supplied. A producer also agreed that he saw no desperate buyers on prompt, which explained the slightly steeper contango going into March; another producer expected an increase in demand already in February, because the industry would replenish stocks ahead of turnarounds. Meanwhile, following a full settlement of feedstock benzene at a Eur113/mt decrease and ethylene at a rollover, European styrene followed with a Eur40/ mt decrease for February, settling at Eur1,448/mt ($1,976/ mt) FOB ARA, industry sources said. The initial settlement was concluded between BASF and Ineos. Total and Styron followed the settlement at the same level. BASF, Ineos and Total confirmed the settlement. Styron was not available for confirmation by time of press. The settlement was in line with expectations and reflected a difficult balance between a large fall in raw material prices and possible supply constraints ahead of turnarounds, sources said. Although a composite cost reduction effect from benzene and ethylene settlements for styrene was around Eur90/ mt, it was not fully ed down to styrene consumers as it was widely expected the availability would tighten into the second quarter as a number of producers had scheduled shutdowns. With the assumption of 12% discounts, the settled contract price represented around a $15-20/mt over current spot prices, based on the current Eur/ US dollar exchange rate.

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Platts Polymerscan

United States US spot styrene rose 1.70 cents on the week, assessed at 76.50 cents/lb FOB USG Friday on tight supply in the market. Two styrene deals were done Tuesday - a February deal at 76 cents/lb FOB USG for 5,000 mt and a March deal at 76 cents/lb FOB USG for 5,000 mt. Another styrene deal was heard done post-assessment window Friday, but specifics on the deal were unavailable by time of publication. Styrene offers for March were heard at 78 cents/ lb FOB USG throughout the week. Styrene prices had been tracking feedstock benzene for most of January, but sources said styrene had become disconnected from benzene over the last week. February benzene prices fell 7 cents week on week, assessed at 473 cents/gal FOB USG Friday, while the February US benzene contract price settled 36 cents lower at 480 cents/gal, sources said. Despite the lower benzene, sources said styrene prices would continue to go up as supply was expected to get tighter. turnarounds in the US -- as well as Europe and Asia -- were expected to make styrene tight globally. In the US, Americas Styrenics was heard undergoing a turnaround starting in the second half of February and lasting into the first half of March at its St. James, Louisiana, facility, sources said. Americas Styrenics was unavailable to confirm by time of publication. The St. James facility has a capacity of 2.1 billion lbs/year. LyondellBasell was also heard undergoing a turnaround on one of its propylene oxide-styrene monomer units at its Channelview, Texas, 2.7 billion lbs/year facility starting in the second half of March, sources said. LyondellBasell declined comment. A producer said most or all of February product had already been sold, and March product was very tight. “There is not a lot of product in the market. It is uncommon to see people selling forward like they are,” a second producer said midweek. Domestic demand was characterized as weak to steady, while export demand was heard steady to strong. Arbitrage windows to Europe and Asia were closed on paper Friday, according to Platts data. With European styrene for February assessed at $1,735/mt FOB ARA Friday and freight at $50/mt, US styrene would need to be slightly lower at 76.43 cents/lb to work an arb, according to Platts data. In feedstocks, ethylene fell 4 cents on the week, assessed at 64 cents/lb FD USG Friday.

Asia Asian styrene monomer rose by $17.50/mt week on week to $1,703.50/mt FOB Korea Friday, and by $16.50/ mt to $1,732.50/mt CFR China, as demand remained relatively firm on the expectation of tightening supply due to turnarounds over February-April in Asia. Day on day -- due to the rolling over of the assessment laycans amid

Copyright © 2013, The McGraw-Hill Companies

February 6, 2013

a contango structure -- the FOB Korea price rose $3.50/ mt and the CFR China market rose $6.50/mt. However, comparing the same laycans, FOB Korea was assessed down $3/mt day on day for March loading cargoes, as demand was seen weaker with the bid for March $5/mt lower than the day before at $1,700/mt on Friday. For March-loading CFR China cargoes, the negotiation range was heard stable from Thursday at $1,730-1,740/mt. Some market participants said they expect the SM-benzene spread to widen over the coming SM turnaround season. Compared to last Friday, the SM-benzene spread widened by $35/mt to $313.50/ mt, as benzene fell $17.50/mt week on week and was down $9.50/mt day on day to $1,390/mt FOB Korea Friday. “[Everybody] thinks March will be the highest,” a Northeast Asian trader said Friday, indicating that the price of SM is expected to rise until March, then stabilize or soften after that. He also said there were “lots of inquiries” from buyers in Southeast Asia and that South Korean cargoes were heard on their way to Southeast Asia for arrival in February. Southeast Asia and South Asia are looking tight on SM supply at the moment, sources said this week, due to several turnarounds within the region and also in the Middle East. Indian sources said stocks at Indian ports were low at the moment. The Indian unsaturated polyester resin market was doing “extremely well”, a producer said, adding that other SM derivatives were suffering from low demand. At least one Iranian cargo, of about 3,000 mt, was heard to be on its way to India in February. But other than that, spot supply could be limited, sources said. However, supply in the Taiwanese market should increase, with Grand Pacific Petrochemical Corp. set to run both its SM plants at Tashe at full capacity after the restart of its 240,000 mt/year No. 3 unit on Thursday, a source said Friday. The turnaround began on December 7 and was initially scheduled to last a month but was extended due to additional repair work. The extended turnaround resulted in the reduced supply of SM to both GPPC’s contract customers in Taiwan as well as the company’s own downstream plants. Its 130,000 mt/ year No. 2 SM plant has been running at full capacity while the No. 3 unit was under maintenance. GPPC’s 80,000 mt/ year acrylonitrile-butadiene-styrene plant was running at a reduced rate of 60% in January, and the 100,000 mt/year polystyrene plant at 80% because of low SM production. The source said the downstream plants’ operating rates were likely to be increased in the near future, but that this would also depend on market demand. China’s demand in February is expected to be low due to the Lunar New Year holidays. Also, Taiwan Styrene Monomer Company plans to restart its 140,000 mt/year No. 2 SM plant at Lin Yuan after maintenance next week, a source said Monday.

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February 6, 2013

Polymer Feedstocks: Intermediates Purified Terephthalic Acid

Europe

Polymer Feedstocks – Intermediates Weekly Spot

European purified terephthalic acid market awaited a settlement of the upstream paraxylene contract this week. Traders widely expected to see a slight increase on January levels, quoting $1,255-1,275/mt range for February , depending on the Euro/US dollar exchange rate. Downstream, demand for polyethylene terephthalate, for which PTA is the main feedstock, had been on the mend in recent weeks, boosting demand for PTA and offering hope for better production economics. Moreover, better prospects for PTA demand were cited by a source from Turkey’s Petkim as a reason to restart its long-idled purified terephthalic acid unit at Aliaga. A combination of expensive feedstock paraxylene and low demand from downstream PET last year left PTA producers facing difficult choices. In turn, Petkim, which also produces paraxylene, shut its 70,000 mt/year unit in midApril 2012. “It seems we will be able to sell our PTA on the existing market,” the source said, adding that the product will be sold through a combination of contracts and spot deals.

United States PTA market players were monitoring the rising cost of feedstock paraxylene, which continued to put upward price pressure on PTA despite low demand. January’s formula-driven PTA contract price was assessed at 67.22 cents/lb ($1,482/mt), but an increase in February appeared possible with feedstock prices at the highest level in 16 months. PTA contracts are settled retroactively following an announcement of the month’s PX contract. Spot PX prices were assessed by Platts Friday at $1,630/mt FOB US Gulf Coast, up $25 day on day, and at the highest level since September 21, 2011. According to sources, higher PX prices have been attributed to Asian PX prices being pressured by improving demand. Downstream, US PET producers have announced 4 cents/lb increase for February after January contracts settled earlier this week up 3-3.5 cents/lb. Despite seasonably low demand, producers have said increases are necessary due to rising costs of raw materials.

PTA CFR China ($/mt)* PTA CFR SE Asia ($/mt) PTA CFR South Asia ($/mt)

1191.4-1193.4 1192.0-1194.0 1212.0-1214.0

EDC EDC EDC EDC

CFR FE Asia ($/mt) CFR SE Asia ($/mt) FOB NWE ($/mt) FOB USG ($/mt)

384-386 364-366 290-295 280-290

VCM VCM VCM VCM

CFR FE Asia ($/mt) CFR SE Asia ($/mt) FOB NWE ($/mt) FOB USG ($/mt)

899-901 949-951 740-745 785-795

Acrylonitrile Acrylonitrile Acrylonitrile Acrylonitrile Acrylonitrile

CFR FE Asia ($/mt) CFR SE Asia ($/mt) CFR South Asia ($/mt) FOB USG ($/mt) CIF Mediterannean ($/mt)

1979-1981** 1989-1991** 1979-1981** 2000-2020** 1930-1940**

Monthly Contract Price PTA FD NWE (Eur/mt) (Jan ) PTA Delivered USG (¢/lb)(Jan) VCM Delivered USG (¢/lb)(Jan )

1045-1055 67.22-67.22 36.00-36.50

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

Platts Asian PTA versus Paraxylene ($/mt) 1,800

($/mt)

1,600 1,400 1,200 PTA CFR China PX CFR Taiwan

1,000 800 14-Sep

12-Oct

09-Nov

07-Dec

04-Jan

01-Feb

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

Asia The Asian purified terephthalic acid market rose $17/mt week on week to be assessed at $1,202/mt Friday, driven by a strong paraxylene feedstock market and despite a bearish polyester market. On Friday, the CFR Taiwan/China PX benchmark rose $12.50/mt from the previous week to be assessed at $1,704.50/mt Friday. Trading activity was thin throughout this week, with limited spot availabilities, especially Taiwan-origin cargoes. Currently, PTA plants in Taiwan are running at around 50-60% of capacity due to negative PTA margin, which slashed spot availabilities from there. On the buyers’ side, companies in China were not in the market seeking spot cargoes due to the Lunar

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New Year holidays in the middle of February. Market sources said polyester makers are preparing to shut their plants before the Lunar New Year holidays. “There are more and more polyester plants shutting down,” said a market source. “They are now reducing their PTA inventories before the holiday; no fresh PTA orders,” said another market source, adding that the strength in the Asian PTA market this week was due largely to strong PX feedstock. On Friday, the PTA bid and offer range was heard at $1,200-1,205/mt CFR China for Taiwan-origin cargoes, up from $1,195-1,200/mt on

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Platts Polymerscan

Thursday. Looking forward, market sources said the Asian PTA market would likely be weaker as supplies in China are increasing. China’s Zhejiang Yisheng Petrochemical is likely to start commercial operations at its 1.8 million mt/ year PTA plant in Hainan after the Lunar New Year holidays. Meanwhile, the PTA margin remained negative this week at minus $72.97/mt Friday, compared with minus $82.72/mt a week ago. In related news, China’s state-owned Sinopec nominated its February Contract Price for PTA at Yuan 9,200/mt, unchanged from January. On an import parity basis, the nomination price works out to $1,181/mt.

Acrylonitrile

Europe Spot acrylonitrile prices in Europe remained steady this week. Firm bids and offers were scarce, while price views from sellers and buyers were far apart. Most buyers were heard covered by contractual volumes, while those who were looking were in no rush to book and preferred to wait until after the Lunar New Year to receive more clarity on how the Asian market would develop. “I am not getting a lot of inquiries,” a trader said, adding that the market could be at around $1,900-1,950/mt. Some buyers felt $1,800-1,850/mt was justified due to light downstream demand. However, producers were bullish, noting steady gains in Asia and US, as well as increased propylene cost, and ed the rise in European prices. In production news, disruptions at Aksa’s Yalova site in Turkey had limited effect on the market, sources said. Aksa said Tuesday it had restored full production at its 308,000 mt/year acrylic fiber plant following a fire on January 27. Production lines were unaffected, but were shut as a precaution. Elsewhere, a workers’ strike at SABIC’s Geleen site in the Netherlands ended, allowing the crackers and polymer plants to begin ramping up on Tuesday. DSM’s 275,000 mt/year ACN plant in Geleen, which gets its propylene supply from SABIC, was unaffected by the disruptions, a company source said.

United States The US acrylonitrile export price climbed $50/mt week on week, assessed at $2,010/mt FOB USG Tuesday as the market continued to track higher propylene. ACN hiked to $2,000/mt for the first time since May 1, 2012, when it was assessed at $2,000/mt FOB USG. No bids, offers or deals were heard on the week. Sources expected ACN spot prices to continue rising as the February US propylene contract price was expected to settle higher. February nominations were up 9 cents/lb for PGP and CGP, sources said. The January US propylene contract settled 15 cents/lb higher than December at 73 cents/lb for PGP and 71.5 cents/lb for CGP. The arbitrage windows to Asia and Europe remained closed, sources said. European ACN was assessed stable at $1,935/mt CIF Med Tuesday, while Asian ACN was assessed $20/mt higher at $1,980/mt CFR Far East Asia. ACN demand was described as weak, with a producer adding that fiber

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February 6, 2013

demand in Europe and the US was showing some strength. Supply was described as tightening amid producers cutting production rates as production costs have been estimated around $2,000/mt and could rise as high as $2,200/mt depending on the propylene contract settlement. Sources said if demand picked up, the tighter supply could cause prices to rise more, but a trader said if that were to happen, it would likely be a short-term problem.

Asia Asian acrylonitrile prices climbed this week on rising feedstock costs amid thin discussion as the Lunar New Year holidays approach. The CFR Far East Asia and CFR Southeast Asia markers were assessed Tuesday at $1,980/mt and $1,990/mt, both up $20/mt week on week, while the CFR South Asia marker was assessed at $1,980/mt, unchanged from a week earlier. Domestic trades in China were at Yuan 14,400-14,450/ mt Tuesday, or $1,900-1,906/mt on an import parity basis, up Yuan 100-150/mt from a week earlier. A H2 February cargo of 500 mt was traded late last week at $2,000/mt CFR China. Offers for February cargoes were unchanged from last week at $2,050/mt CFR China, but buying interest was thin this week ahead of the long holidays. The China market will be shut February 9-15 for the Lunar New Year holidays. Upstream, propylene was assessed at $1,348/mt FOB Korea and $1,385/mt CFR China Tuesday, up $43/mt and $45/mt, respectively, week on week. In India, a 2,000 mt February shipment of Russiaorigin cargo was heard traded at $1,980/mt CFR, but Platts could not confirm the deal. H2 February loading European cargoes were heard offered at $2,000-2,050/mt CFR India but buying interest weakened as producers were unable to down the costs. The spread between ACN and downstream acrylic fiber prices was at $400/mt, with acrylic fiber prices heard at $2,400-2,450/mt CFR. Acrylic fiber producers typically need a spread of $500-600/mt to break even. In plant news, China’s Sinopec Anqing Petrochemical has achieved on-specification output at its new 130,000 mt/year ACN plant in eastern Anhui province, the company said Monday. It injected feedstock into the plant on January 31 and achieved on-spec output at 10:46 pm local time (1446 GMT) on February 2. The plant was initially supposed to come online in September 2012, but this was delayed due to technical issues. The unit is currently running at around 70% of its capacity, a source with another Chinese ACN producer said Monday. Sinopec Anqing Petrochemical has another 80,000 mt/year ACN plant at the same location. The current run rate at this unit is not known. In market news, Japan’s Asahi Kasei last Wednesday set its February Contract Price for ACN at $2,050/ mt CFR Far East Asia, up $50/mt from its January .

Ethylene Dichloride / Vinyl Chloride Monomer

Europe EDC: Prices for EDC jumped heading into February on the back of global increases and a lack of liquidity. One seller was seeking prices above $300/mt FOB NWE, claiming

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that, at lower levels, it made more sense to export material to Asia. A buyer pegged the market between $270-280/ mt FOB, but claimed not to be seeking additional material for February. In production news, KemOne declared force majeure on caustic soda out of its Lavera site Tuesday, although their downstream operations in PVC remained running at a reduced rate. A company source said there was a 20-25% allocation on PVC, but they were able to run their vinyls units due to making additional ethylene purchases. VCM: A potential buyer said offer prices for VCM in Europe were too high and it made no sense to seek cargoes for February. “Everybody is fairly balanced, so it is not possible to get a price that works into PVC,” the source said, adding it would need a delivered price close to Eur600/mt. A trading source countered that PVC had not been as strong as expected in January and there were pockets of VCM length that could be put together for export. The source added that the main problem was shipping operators not wishing to handle VCM and subsequent freight rates, which could extend between $200-300/mt.

United States EDC: The US ethylene dichloride assessment for export increased $10/mt week on week Thursday to $280-290/ mt FOB USG on a 3-30 day basis as the arbitrage to China and Southeast Asia was heard still open in a contango market. No firm deals were heard over the week, but prices were pegged on an FOB USG basis at $290-295/mt for late February and early March loading with freight estimated at roughly $75/mt. Contractual material was also heard headed to South Korea, but this could not be confirmed by time of publication. Upstream, ethylene was assessed Thursday at 65 cents/lb FD USG, down 1.75 cents week on week. One source said that, given the recent cost-push from ethylene over the month, higher EDC prices continue to be ed. Feedstock chlorine was stable week over week Tuesday at $200-210/st FOB plant. VCM: US vinyl chloride was assessed for export at $785-$795/mt FOB USG Thursday, up $10/mt week on week, as recent restrictions on VCM production this year continue to tighten supply. Prices were pegged notionally at the $800/mt level for February, but no firm bids, offers or trades were heard over the week. Producer PPG Industries was expected to be operating its Lake Charles, Louisiana, chemical complex by the end of January at reduced rates; however, confirmation from the company was unavailable by time of publication. The company declared a force majeure December 24 on VCM from the plant following a chemical fire. Formosa Plastics has scheduled a turnaround during the second half of February for its Point Comfort, Texas, VCM plant. Also in H2 February, Westlake’s Lake Charles, Louisiana, Petro2 steam cracker expansion is expected to be completed, sources said. Downstream, US PVC export and domestic prices held firm week on week, assessed Wednesday at $1,000-1,010 /mt FAS Houston and 49-51 cents/lb delivered via railcar, respectively.

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February 6, 2013

Asia EDC: Asian ethylene dichloride prices gained $5/mt week on week to $385/mt CFR Far East Asia and $365/ mt CFR Southeast Asia Thursday on supply tightness. Market sources said that supply in Japan continues to be tight, with producers operating their EDC plants at lowered rates due to negative margins for caustic soda. “Japanese producers are still coming out to buy spot EDC cargoes because its more economical to do so than to produce it themselves,” a Japanese trader said. In Japan, Asahi Glass plans to shut its 200,000 mt/year ethylene dichloride plant at Chiba in mid-February for 40 days of maintenance, a company source said Thursday. “The scheduled maintenance will probably be completed towards the end of March,” the source added. The source declined to reveal the current operating rate of the EDC plant. In Southeast Asia, the spot market was heard to be quiet as the majority of trades were done on a contractual basis. A trader said that demand for EDC in Southeast Asia was heard to be lower since Petronas shut its 440,000 mt/year VCM plant in Kertih at the end of 2012. “That’s why VCM on CFR SEA basis is trading at a discount to CFR SEA,” the trader said. Japanese traders were heard to be offering EDC at $400/mt CFR SEA. VCM: Asian vinyl chloride monomer was assessed up $30/mt week on week at $900/mt CFR Far East Asia Thursday, and flat week on week at $950/mt CFR Southeast Asia. In China, VCM was heard traded at around $900/mt CFR China. Market sources said that VCM supply in China was heard to be tight. “VCM prices should trend nearer to $900/mt if CFR SEA is trading at $950/mt, otherwise an arbitrage window could open,” a Chinese trader said. Meanwhile, offers for VCM were heard at $920/mt CFR China. In Southeast Asia, market sources said that VCM demand continues to be healthy, particularly in Thailand and Indonesia. However, supply for VCM remains tight as Southeast Asian producers are mostly channeling their VCM to downstream polyvinyl chloride production. PVC was last assessed $15/mt higher week on week at $1,055/mt CFR SEA Wednesday, with demand heard to be strong in Southeast Asia. An Indonesia source said that demand for PVC is expected to pick up over the next few weeks as items damaged by the recent floods in Jakarta have to be replaced.

News

UAE Fujairah port bans 26 ships, includes tankers for violating anchoring rules Singapore — UAE’s Port of Fujairah, which is the world’s second biggest bunkering center, has banned 26 vessels including supertankers for violating its anchoring guidelines, according to the two port notifications seen by Platts. In the first notice issued

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by the Harbor Master of the Port of Fujairah on January 15, 20 vessels were banned from calling on the Port of Fujairah, effective from the notice date. A second notice banning six ships was issued by the port on Monday, with immediate effect. “These vessels were not following the port rules and had dropped anchors at a restricted area. They had been warned before but still they have repeated it,” Captain Tamer Masoud, the Harbor Master of the Port of Fujairah, told Platts late Tuesday when ed over the phone. “The ships should follow our guidelines.” According to the January 15 notice, the vessels banned include VLCCs Star Light Venture, National, Maersk Eli, Amanos, La Paz, Ghazal, Ikomasan, Suezmax tanker Jiaolong Spirit and Aframax tankers such as Sea Lion, Al Buhairah, Four Island. Also banned are Panamax tankers like Bai Lu Zuo, Salamina, Leader, LPG carriers Maharshi Mahatreya, Sunny Joy, product tankers Trader, Royal Queen, bulk carrier Iron Vassilis and general cargo ship Northern Diamond. In the notice issued on February 4, VLCCs F Whale, A Elephant, product tankers Alfa Karadeniz, Elite and chemical tanker Doris Ruby were banned from entering the Port of Fujairah. “These listed vessels are no more allowed to call Port of Fujairah or Fujairah Offshore Anchorage,” said the notice, which is signed by Captain Tamer Masoud and sent to shipping agents. The ban would mean that the oil tankers named in the two notifications would not be allowed to load and discharge crude and oil products from Fujairah port. “If any owner fixes a ship for loading cargo from Fujairah, they will have to nominate a ship from their fleet [that is not in the list of ships banned by the port],” Masoud said. While Singapore is the biggest bunkering port in the world with a traded sales volume of 43.2 million mt in 2011, the next largest ports of Fujairah and Amsterdam-Rotterdam-Antwerp each handled an average 24 million mt in 2011.

Asian benzene needs to rise as cumene demand to balloon by 45.1% by 2020 Singapore — Demand for benzene in downstream derivatives plants in Asia is expected to increase further by 2020 on the back of a forecast 45.1% increase in global demand for feedstock cumene by 2020 from 2011, according to a report by GBI Research on Tuesday. Global demand for cumene grew from 8.61 million mt in 2000 to 12.39 million mt in 2011, and is expected to grow at a compound annual growth rate (CAGR) of 4.2% to reach to 17.99 million mt in 2020, the report said. Asia is expected to for 49.1% of global cumene demand by 2020, the report said. The Asia-Pacific region has emerged as the world’s largest consumer of cumene over the past decade due to increased demand from the construction of more phenol and acetone derivatives plants. In addition, Asia is expected to for 49.1% of global cumene demand by 2020. Cumene is the feedstock for downstream products such as

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February 6, 2013

bisphenol-A, polycarbonate and phenolic resins which are used in the packaging, construction and pharmaceuticals industries. The product is manufactured from feedstock propylene and benzene. At least three new phenol and acetone plants are expected to come onstream by end of 2013. Taiwan’s Formosa Chemicals and Fiber Corp is building a 300,000 mt/year phenol plant in Ningbo, China which will be ready by end of this year. The plant is also able to produce 180,000 mt/year of acetone. The plant will have a unit that can deliver 450,000 mt/year of cumene. South Korea’s Kumho P&B Chemicals’ plans to start phenol production at its new Plant No.4 in Yeosu by the end of this year or early 2014. This will raise phenol capacity by 300,000 mt/year. South Korea’s LG Chem also has a new solvents plant in Daesan, which is able to produce 200,000 mt/year of cumene, 300,000 mt/year of phenol, 180,000 mt/year of acetone, as well as bisphenol A. The plant was first scheduled to come on line in October, but this was delayed to November/December and later to January. The plant still has not started commercial production but no further details were available. Demand for benzene in Asia has also been boosted by new benzene derivatives market in China, which expanded in the second half of 2012 as new caprolactam capacity came on stream. At least three new plants — Sinopec Baling, Shandong Dongju and Shandong Haili — with total capacity of 400,000 mt/year — were started up in the second half of 2012, with benzene requirements estimated at 376 million mt/year. Other caprolactam plants — Jiangsu Haili, Nanjing Dongfang, DSM Nanjing expansion, Nei Meng Petrochemical and Lu Xi Petrochemical — with a combined capacity of 700,000 mt/year — are expected to start up in China over 2013 and 2014. The FOB Korea benzene 2013 term contracts were mostly concluded at a of $10-$12/mt to the Platts FOB Korea benzene marker. This is an increase of around $2-$4/mt from the s for 2012 contracts.

Celanese announces global price increases on acetyl intermediates Houston — US-based Celanese, a producer of acetyl intermediates, is increasing list and off-list prices for several acetyl intermediate products effective immediately or as contracts allow, according to a notice sent to customers. In the US, Canada and Mexico the price for methyl isobutyl carbinol (MIBC) will increase by 5 cents/lb, methyl isobutyl ketone (MIBK) will rise by 7 cents/lb, and paraformaldehyde 91-93% will increase by 1.5 cents/lb, the company said late Tuesday. In Central and South America, the price for MIBC will increase by $100/mt, MIBK will increase by $150/mt, and paraformaldehyde 91-93% will increase by $30/mt. In Europe, the price for butyl acetate will increase by Eur40/mt ($54/mt). In Asia (outside China), the price for vinyl acetate monomer (VAM) will increase $20/mt, butyl acetate will increase by $20/mt, MIBC will increase by $100/mt, MIBK will increase by $150/mt, and paraformaldehyde 91-93% will increase by $15/mt. In China, the price for acetic acid

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will increase RMB100/mt ($16/mt), VAM will increase by RMB200/mt, acetic anhydride will increase by RMB150/mt, MIBC will rise $325/mt, MIBK will increase by $325/mt, and paraformaldehyde 91-93% will increase by $30/mt, the company said in the notice.

Indian insurers fret over cover for refiners running Iranian oil London — Indian insurance companies are worried about extending full cover to refiners which process Iranian crude and have asked for clarification from the companies as well as reinsurers, insurance industry and refining industry officials and sources said Wednesday. “We want clarity. In case anything happens to refineries while processing Iran crude, will full coverage of claims be possible?” said Ashok K. Roy, chairman and managing director of state-owned General Insurance Corporation (GIC). Roy, who also heads the General Insurance Council, a body representing India’s insurance industry, said he has written to companies and of the council to highlight the issue. GIC, although the largest reinsurer in India, depends on European reinsurance companies, as its ability to cover risk is limited. Roy said that, when insurers discussed the issue during a recent meeting, there was an apparent feeling that any

February 6, 2013

refinery processing Iranian crude would be outside of the ambit of any cover and that any losses would not be payable by the reinsurers on the protection program of the companies. Roy said no reinsurance company has so far stated explicitly that refiners processing Iran crude would not be eligible for full cover. But refining industry sources said some reinsurers, reluctant to take any risk given the EU’s ban on insurance provision for shipments of Iranian oil, had walked out of reinsurance deals involving Iranian oil. An Indian insurance company that recently renewed cover for a refinery included a clause that made the cover “subject to sanctions” but without specifying any specific sanctions provision, a refining industry source said. One argument put forward is that the assets in question are all Indian — including the crude once it has been bought by Indian refiners — and should therefore not be excluded from full insurance cover. Another source said GIC had extended only 50% of the cover that Mangalore Refinery & Petrochemicals had sought for its soon-to-be-commissioned single point mooring. “MRPL wanted $100 million, but GIC has offered only $50 million,” the source said. Commenting on this, Roy said GIC had offered cover to the extent it could without recourse to reinsurance as it was still not clear whether reinsurers would honor full cover where Iranian crude is involved. MRPL wasn’t available for

Global Production Update Company Location Capacity* Timing Phillips66 Linden, NJ 350 PP Nov. 7 ExxonMobil Baton Rouge, LA 280 PP Nov. 1 Braskem Marcus Hook, PA 350 PP Oct. 29 Phillips66 Linden, NJ 350 PP Oct. 29 Indelpro Altamira, MX 700 PP Oct. 12 Flint Hills Marysvill, MI 55 PP Sep. 28 LyondellBasell Undisclosed --- Sep. Pinnacle Garyville, LA 450 PP Sep. 5 Borealis Beringen 115 PP H2 April Borealis Beringen 230 PP H2 Mar SABIC Geleen 620 PP Feb 5 SABIC Geleen 620 PP Jan 31 Ineos Lavera 140 PP Jan 2013 SABIC Geleen 250 PP Dec 19 SABIC Geleen 250 PP Nov 28 Borealis Porvoo 220 PP Nov 8 Borealis Porvoo 220 PP Nov 6 SABIC Gelsenkirchen 200 PP Oct 17 SABIC Geleen 370 PP Oct 17 Ineos Grangemouth 235 PP Sep 20 Ineos Lavera 140 PP Oct-Nov SABIC Gelsenkirchen 330 PP Sep 10 SABIC Gelsenkirchen 330 PP Sep 5 Petronas Kuantan 80 PP SCG Map Ta Phut 400 PP SCG Map Ta Phut 320 PP Polymirae Yeosu 700 PP Sinopec Shanghai 200 PP Sinopec Shanghai 200 PP TA = scheduled turnaround; SD! = unplanned shutdown; SU = startup; DB = debottlenecking; OR = operating rate

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Status Power restored; RS late Nov. Allocation lifted; sources SD! Hurricane Sandy SD! Hurricane Sandy TA; 7 days FM through Oct. 24; feedstock 11 FM on selected grades RS one line; FM stands TA two weeks TA two weeks Ramping up as strike ends OR reduced due to strike FM! SU, OR reduced TA one week in 2nd wk of Dec Ramping up; cracker back up Run rates cut due to cracker issue SD! due to technical issues; 2-week TA starts late this wk TA one week from early Nov TA 3-4 weeks TA 4-5 weeks SU SD! due to technical issues SD permanently in Q1 OR 100% in Jan OR 100% in Jan OR, less than 80%, no TA in 2013 TA Oct 25, 15 days TA Oct 25, 15 days

Platts Polymerscan

comment on the matter. Another source, meanwhile, said: “Renewing insurance with a clause like ‘subject to sanctions’ is as good as having no cover...They are only trying to side-step the issue.” So far, GIC and other state-owned insurance companies have stipulated $50 million as the maximum cover they can provide for cargoes coming from Iran. Shipping companies have been reluctant to take the risk at such low levels of cover and refiners have depended on the National Iranian Oil Company (NIOC) to deliver crude on a CIF basis. Apart from inadequate cover for shipping Iranian crude, the only case of limited cover for a refinery has been that of

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February 6, 2013

Chennai Petroleum Corporation, in which NIOC holds a 15.40% stake, one of the refining sources said. CL, a subsidiary of India’s biggest refining and marketing company, Indian Oil Corporation, was given limited cover that excluded Iran’s stake in the assets, he said. Chennai Petroleum wasn’t available for comment on the matter. India’s crude oil imports from Iran during the current financial year, which ends in March, are scheduled 40% below the 17.5 million mt imported in the year to March 31, 2012. MRPL, private refiner Essar and Hindustan Petroleum Corporation are India’s major importers of Iranian crude.

POLYMERSCAN

Volume 36 / Issue 6 / February 6, 2013

Editorial: 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: +54-11-4121-4810, E-mail: [email protected] Copyright © 2013 The McGraw-Hill Companies. All rights reserved. No portion of this publication may be photocopied, reproduced, retransmitted, put into a computer system or otherwise redistributed 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 such information 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 and conditions.

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