ETHYLENE

Ethylene prices have recorded a further sharp drop to US$1200/MT in Asia in the week of March 10, 2008, mainly due to growing supply across the Asian region coupled with reduced buying. The supply pressure has been strong despite reduction in operating rates by several naphtha crackers, as interest from buyers continues to wane and be restrained. As profit margins get smaller due to the difference between feedstock naphtha price and ethylene price realisation, crackers in Asia plan to lower operating rates. Formosa's 900000 tpa No.2 cracking plant will be closed for 7 to 10 days this month. Chinese Petroleum Corporation (CPC) is also considering scaling down operations at three of its cracking plants. Users in Taiwan continue to have high ethylene stocks, hence they are unwilling to purchase spot ethylene cargoes offered in the range of USD1170-1180/MT CFR China

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