Organic Chemicals Keep High Prices

  Phenol

In March 2007, with the overhaul of phenol/acetone units of
Sinopec Beijing Yanhua Petrochemical Co., Ltd. approaching,
insiders generally predicted that the price of phenol would
increase. In mid-March, some local manufacturers in North of
China lifted their ex-factory prices in succession. Some phenol
users who cannot afford the high cost of raw materials tried to
use substitutes to replace phenol.
   As of March 30th, 2007 the bulk trading price of phenol was
at RMB14 700-14 800/t in the ports of East China, an increase
of RMB500/t over a month before, and in other regions of China,
the prices rose RMB1 100 to RMB15 200-15 300/t.
   Offers from Formosa Chemicals & Fibers Corp. climbed up and
stayed at US$1 500/t CFR China for the April spot goods, and LG
Chemical raised its offer for April to US$1 550/t CFR China.
   The phenol/acetone units in Sinopec Beijing Yanhua
Petrochemical Co., Ltd. is projected to be restarted at the end
of April, easing the tight supply considerably, so the price may
fall at that time.

  Acetone

In March 2007, market demand grew slowly in China. Due to the
drop in output of Sinopec Beijing Yanhua Petrochemical, the
supply was strained, and many local producers lifted ex-factory
prices.
    As of March 30th, 2007 acetone was trading at RMB8 000-8
050/t in the ports of East China, a rise of RMB100/t over a month
before, and in South China, the bulk trading prices rose
RMB600-650/t to RMB8 450-8 500/t.
    Offers of US$850-860/t CFR China by suppliers from Taiwan
province and Korea in April have not been accepted by buyers in
East China and South China.  In mid-April, a shipment of 1
thousand tons will reach East China from Korea at a price of
RMB840/t CFR China.
   It was expected that the price of acetone would still rise
in early April. However, due to the slack demand, the growth
would not be large. With the startup of phenol/acetone units in
Sinopec Beijing Yanhua Petrochemical, the market price rise may
be restrained.

  MEG

In early March 2007, the price of MEG (mono ethylene glycol)
dropped after a slight rise because of sluggish demand from
downstream users. The high inventory of MEG and the startup of
a new 380 thousand t/a MEG unit in Sinopec Shanghai Petrochemical
also contributed to the price drop of MEG. In late March, sales
of downstream polyester improved, and the price of MEG rebounded
relatively. As of March 30th, 2007 MEG was traded at RMB8 100-8
150/t in East China, a drop of RMB50-100/t over a month before,
and the offer on imported goods remained at US$875-880/t. In
April 2007, the overhaul of MEG units in BASF-YPC Co., Ltd will
lead to a supply decrease in the domestic market. However, the
market situation of polyester has not changed fundamentally, and
the demand for MEG will still not be high.
    It is expected that the price of MEG will remain stable or
probably continue to rebound slightly.

  Pure benzene

In March 2007, the market price of pure benzene first rose and
then dropped. In early March, because the price continued to
maintain a high level in Asian markets, major domestic pure
benzene producers raised the ex-factory prices slightly. In
mid-March, due to sluggish demand caused by overhauls of
downstream users and increased sales of pure benzene produced
in Northeast China, the tight supply was eased and trading prices
in local markets dropped slightly.
    As of March 30th, 2007 pure benzene was traded at RMB9 150/t
in East China, a drop of RMB50/t from a month before, and the
offer price in Asian markets rose US$28-29/t to US$1 027-1 028/t
FOB Korea.
    More import shipments will reach East China in the near term
and several large scale downstream units will discontinue
production. The supply in the domestic spot market is therefore
sufficient and the price of pure benzene is unlikely to climb
in April.

  Toluene

In March 2007, due to slack demand for toluene in downstream
sectors, the bulk transaction price of toluene decreased
slightly. The quoted prices of toluene in Asian markets
continued to drop caused by the downturn of the US market. In
late March, the price of toluene in Asian market rebounded
because of a drastic price rise of crude oil.
    As of March 30th, 2007 toluene was traded at RMB7 450-7 500/t
in East China, a drop of RMB300-350/t from a month before, and
the offer price in Asian markets was down US$2-3/t to
US$834-836/t FOB Korea.

  Xylene

In March 2007, due to price drops of both pure benzene and toluene,
the market price of xylene came down. As of March 30th, 2007
solvent grade xylene was traded at RMB7 700-7 750/t in East China,
a drop of RMB100-150/t from a month before, and the offer prices
in Asian markets were down US$20-30/t to US$800-810/t FOB Korea.
    Due to low inventory and a price rise for crude oil, many
dealers predict that the market price of xylene will probably
be stable or climb.

  Styrene

In mid-March 2007, due to a demand rise, the price of styrene
in East China rebounded notably. However, the dealers were not
very active with few trading actions, and the price rose for
several days and dropped afterward. With a price rise of crude
oil in the international market, styrene prices touched bottom
and picked up at the end of March.
    As of March 30th, 2007 styrene was traded at RMB1 1800-1
1900/t in East China, a rise of RMB100-200/t over a month before,
and the offer price in Asian markets dropped US$5-8/t to US$1
255-1 257/t FOB Korea.
　　The styrene market will adjust in April, and most dealers
expect that with an expected demand rise of EPS (expandable
polystyrene), the price of styrene will probably go up.
　　
　　(two drawings)