FEEDSTOCK - ETHYLENE

Augmented by dual forces of reduced output from South Korean and Chinese producers on one hand and bullish downstream Polyethylene markets on the other, ethylene prices spiked to US$1265/MT in Asia in the week of December 10, 2007. In a bid to maximize production margins, majority of Korean producers chose to utilize ethylene inventories for captive consumption in polyethylene production. Absence of fixed offers from the spot market kept market activities subdued. Additionally, ethylene output reduction to the tune of 3,000 mt/day has been ordered by Sinopec at 8 ethylene plants in an effort to recover a shortfall of fuel and heating oil supply in China