GLOBAL OUTLOOK FOR FEEDSTOCKS (C4s) & ELASTOMERS

March 28, 2011 / Issue No. 148

ASIAN WEEKLY
sliew@cmaiglobal.com jyim@cmaiglobal.com bhyde@cmaiglobal.com mthoelke@cmaiglobal.com kholmquist@cmaiglobal.com acheong@cmaiglobal.com klu@cmaiglobal.com +(65) 6501-1534 +(65) 6501-1535 +(1) 281-752-3208 +(44) 207 766-6682 +(1) 281-752-3214 +(65) 6501-1518 +(65) 6501-1510

20 McCallum Street # 17-01 Tokio Marine Centre Singapore 069046 Telephone: (65)6226 5363 Fax: (65) 6226-5157

Samuel Liew (Asia C4s and Elastomers) Jinsu Yim (Olefins, Asia) Bill Hyde (U.S. C4s and Elastomers) Matthew Thoelke (Europe C4s and Elastomers) Kristen Holmquist (Natural Rubber & Tires) Aaron Cheong (Olefins, Asia) Kelly Lu (Client Services)

WEEKLY MARKET PRICES

Product 1 FOB Cushing WTI Crude 1 C&F Japan Naphtha 1 C&F Japan Butane 1 FOB Asia Crude C4
2

21-Mar to 105.60 988 927 1,262 2,900 2,900 3,850 3,950 3,250 3,450 4,300 4,450 -

25-Mar $/bbl $/ton $/ton $/ton 3,000 3,000 3,950 4,050 3,350 3,550 4,400 4,550

14-Mar to 101.42 944 916 1,206 2,650 2,550 3,850 4,150 3,250 3,400 4,400 4,550 -

18-Mar $/bbl $/ton $/ton $/ton 2,700 2,650 3,950 4,250 3,350 3,500 4,500 4,650
(2)

Move 4.1% 4.7% 1.2% 4.7% 10.3% 13.5% 0.0% -4.8% 0.0% 1.4% -2.2% -2.2%

Mar - MTD 102.42 980 910 1,275 2,714 2,673 3,925 4,125 3,338 3,438 4,425 4,525

Apr 103.59 985 855 1,321 2,960 3,010 3,950 4,080 3,450 3,550 4,400 4,500

Butadiene SBR-1502 SBR-1712 PBR

FOB NE Asia CFR NE Asia CFR NE Asia CFR SE Asia CFR NE Asia CFR SE Asia CFR NE Asia CFR SE Asia

1: Based on last Thursday's closing prices

MONTHLY CONTRACT PRICE SETTLEMENT

Region Taiwan CPC
3

- BUTADIENE
Feb-11 2,176 1,867 Jan-11 2,009 1,699 Movement 8.3% 9.9%

CMAI ACP

Feb-11 2,290 2,183

Jan-11 2,090 2,008

Movement 9.6% 8.7%

Region NAM Contract Marker WEP Monthly

2: Prices are in U.S. dollars per metric ton; 3: See Price Settlement Page

BDE

SBR-1502

SBR-1712

PBR

ABS

Butadiene market ended strongly with FOB levels strengthening while CFR levels lagged behind. Three cargoes were reportedly concluded at about $2,800-$3,000 per metric ton FOB Korea for 2H April/early May loading. SE Asia also sold a cargo last week at slightly higher than $3,000 per metric ton FOB for 2H April loading. Most of these were expected to go to Japan with some to China. Shell Chemicals unplanned butadiene plant shutdown further tightened contract supply. We expect sellers sentiments to remain bullish as Japanese tire producers resumed operations gradually. However, buyers sentiments were fairly mixed. Large buyers in the market bided at about $2,600-$2,650 per metric ton CFR due to ample April inventory. Most buyers continued to resist offers above $2,700 per metric ton delivered. Chinese domestic prices were offered at RMB20,700 per metric ton ex-works as Tianjins new SBR butadiene production came into operation. In Europe the market situation remained tight with inquiries from the U.S., Asia and Russia. Sentiments in the SBR 1502 market remained bearish with further actions by the Thai government to maintain stability and prevent extreme price fluctuations in the natural rubber market, coupled with the return of Japanese auto manufacturing companies to production. Supply was tight with the turnaround season in Taiwan and S. Korea. Nonetheless, the market was affected by supply from China over the week as Chinese tire producers were affected by tighter credit and weaker domestic Chinese prices compared to the international prices. Domestic Chinese prices remained at about RMB25,700-25,800 per metric ton ex-works. SBR 1502 price indications in NE Asia were at about $3,850-$3,950 per metric ton delivered while SE Asia prices were at $3,950-$4,050 per metric ton CIF. SBR 1712 prices remained mostly unchanged as prices were reported at $3,400-$3,500 per metric ton CIF SE Asia and India while the domestic Chinese prices were at RMB21,700 per metric ton ex-works. Most of the Japanese auto makers had already resumed operations after Japans earthquake but were limited by power restrictions, logistic issues and supply of raw materials. Price sentiments remained mixed with different price ranges as buyers resisted higher offers. Most buying indications in the market were at $4,200-$4,300 per metric ton but Japanese buying interest was much stronger with price discussions at about $4,700-$4,800 per metric ton CIF. Korean offers into SE Asia were also at about $4,500 per metric ton delivered while demand from Japan kept prices much stronger. Chinese domestic prices were at RMB 18,300-RMB 18,700 per metric ton ex works last week.

This report is for the exclusive use of the client company. Distribution outside of the client company is strictly prohibited without the prior written consent of Chemical Market Associates, Inc. (CMAI).
The prices presented herein are strictly the opinion of CMAI and are based on information collected within the public sector and on assessments by CMAI staff. CMAI MAKES NO GUARANTEE OR WARRANTY AND ASSUMES NO LIABILITY AS TO THEIR USE.
Copyright CMAI 2011. All Rights Reserved.

Asian Outlook For Crude C4s, Butadiene & Synthetic Rubbers

BUTADIENE & DERIVATIVES PRODUCTION ECONOMICS BUTADIENE Production Cash Cost Week Ending 25-Feb 4-Mar 11-Mar 18-Mar Apr-11 May-11 Extraction (Crude C4) 1,944 1,928 1,933 1,850 1,963 1,944
5 6

DERIVATIVES
4

Production Cash Margin Extraction (Crude C4) 601 672 697 825 997 986 Dehydro e-SBR (Butane) 369 2,835 303 2,839 294 2,822 392 2,854 FORECAST 786 746 3,155 3,140

Production Cash Cost s-SBR 2,940 2,953 2,935 2,967 3,263 3,247 PBR 3,360 3,387 3,387 3,417 3,832 3,798 ABS 2,393 2,419 2,374 2,405 2,494 2,447

Dehydro (Butane) 2,176 2,297 2,336 2,283 2,174 2,184

Production Cash Margin SBR-1712 747 861 726 700 591 593 PBR 1,040 1,113 1,013 1,033 548 552 ABS SBR-1502 -44 4,024 -58 4,153 -12 4,041 -43 4,030 FORECAST 4,046 4,021
6

8 7

Butadiene Affordability PBR 3,627 3,700 3,599 3,648 3,588 3,562 ABS 2,369 2,306 2,514 2,403 2,193 2,566

25-Feb 4-Mar 11-Mar 18-Mar Apr-11 May-11

SBR-1502 1,065 1,161 1,078 1,046 775 780

SBR-1712 3,814 4,005 3,780 3,767 3,996 3,969

-180 -91

4: Butadiene feedstock priced at spot CFR NE Asia; 5: Based on NE Asia spot prices; 6: Based on e-SBR economics; 7: Includes aromatic oil costs 8: Affordability is defined as the highest price paid for the last incremental spot butadiene such that buyer is at breakeven economics

Northeast Asia Naphtha & Butadiene Spread

Dollars Per Metric Ton 3,600 Forecast 3,000
3,000

Asia Butadiene Contract & Spot Prices

Dollars Per Metric Ton 3,600 Forecast

2,400

Approx. Breakeven

2,400

1,800

1,800

1,200

1,200

600

600

0 Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

0 Jan-09

Jul-09
Spot FOB S.Korea

Jan-10

Jul-10
Contract CIF Taiwan

Jan-11

Jul-11
CMAI ACP

BDE-Nap Spread

Naphtha C&F Japan

BDE NE Asia Spot FOB

Butadiene Production Economics

Dollars Per Metric Ton 3,000 Forecast 2,400
1,200

Butadiene & Synthetic Rubber Cash Margins

Based on Spot CFR Butadiene Dollars Per Metric Ton 1,600 Forecast

1,800

1,200

800

600

400

0
0

-600 Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Extraction Cash Margin Butane Dehydro Cash Cost

Extraction Cash Cost

-400 Jan-09

Jul-09 Butadiene

Jan-10 SBR-1502

Jul-10 SBR-1712

Jan-11 PBR

Jul-11

March 28, 2011 / Issue No. 148

Page 2

Asian Outlook For Crude C4s, Butadiene & Synthetic Rubbers

February 2011 Asia Butadiene Price Settlements
CMAI ACP is an unbiased third-party butadiene contract price reference that preserves the economic interest of both producers/sellers and consumers/buyers by ensuring an equitable distribution of butadiene and derivative margins, taking into consideration the average production cash cost of butadiene producers and the average butadiene affordability of butadiene consumers. CMAI ACP minimizes pricing risks by providing an equitable system of chain margin distribution between butadiene producers and consumers. CMAI ACP is derived from CMAIs production cash cost models for butadiene extraction unit (butadiene production cash cost) and CMAIs production cost models for butadiene derivatives (weighted average butadiene affordability). CMAI ACP is the price at which profitability for butadiene and derivative producers is split according to the proportion of capital investment for their respective production units. Please refer to February issue of GOFER Focus for more information

Energy & Feedstock Crude WTI FOB Cushing Naphtha C&F Japan Crude C4 FOB Asia

89.57 $/bbl 895 $/ton 1,154 $/ton

Raffinate-1 Asia FOB Estimate

967

Butadiene Production Cost Extraction Unit

1,690

Butadiene Affordabilities SBR-1502 3,845 SBR-1712 3,612 PBR 3,565 ABS 2,621 Wtd Avg Asia 3,366

Butadiene Prices NE Asia CFR NE Asia FOB

2,430 2,420

Butadiene CMAI ACP

Dollars Per Metric Ton

4,000
3,200 2,400 1,600 800 0 2006 2007
CMAI ACP

Butadiene Spot vs. CMAI ACP

NEA FOB 2,066 2,175 2,420 2,714 2,960 CMAI ACP 9 1,893 2,008 2,183 2,306 2,370

Dec-10 Jan-11 Feb-11 Mar-11 Apr-11

History History Settled MTD Forecast

9: Domestic pipeline equivalent

2008

2009

2010

BDE Avg. Cash Cost

Wtd Avg Affordability BDE Spot CFR

Prices are in U.S. Dollars Per Metric Ton, unless otherwise stated

March 28, 2011 / Issue No. 148

Page 3

Asian Outlook For Crude C4s, Butadiene & Synthetic Rubbers

ASIA BUTADIENE PRICE HISTORICAL & FORECAST TABLE
Naphtha C&F Japan US$/Metric Ton Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 12-Nov-10 19-Nov-10 26-Nov-10 3-Dec-10 10-Dec-10 17-Dec-10 24-Dec-10 31-Dec-10 7-Jan-11 14-Jan-11 21-Jan-11 28-Jan-11 4-Feb-11 11-Feb-11 18-Feb-11 25-Feb-11 4-Mar-11 11-Mar-11 18-Mar-11 25-Mar-11 729 688 733 755 710 666 636 675 687 759 794 855 870 895 980 985 978 956 939 937 951 955 964 971 823 796 806 839 853 856 879 887 888 864 874 869 884 881 882 992 991 994 944 988 Crude C4 FOB S. Korea US$/Metric Ton 821 777 1,026 1,005 877 846 792 818 821 896 964 1,036 1,092 1,154 1,275 1,321 1,310 1,281 1,241 1,232 1,250 1,255 1,259 1,268 998 966 978 1,017 1,034 1,038 1,065 1,075 1,114 1,084 1,097 1,090 1,140 1,136 1,137 1,279 1,266 1,270 1,206 1,262 Forecast Prices Butadiene CFR NE Asia US$/Metric Ton MONTHLY 1,908 1,829 1,980 2,220 2,238 1,950 1,770 1,619 1,720 1,878 2,020 2,082 2,131 2,430 2,673 3,010 2,980 2,935 2,785 2,735 2,775 2,785 2,765 2,785 WEEKLY 2,030 2,000 2,050 2,110 2,050 2,100 2,075 2,075 2,085 2,115 2,150 2,175 2,275 2,375 2,500 2,570 2,570 2,570 2,600 2,950 2,850 2,850 2,850 2,900 3,100 3,150 3,200 3,300 3,300 3,300 3,450 3,600 3,650 3,750 3,850 3,900 4,000 3,900 3,900 3,900 2,350 2,350 2,425 2,425 2,550 2,700 2,750 2,750 2,825 2,825 2,875 3,000 3,050 3,100 3,250 3,300 3,450 3,300 3,300 3,300 3,400 3,450 3,450 3,500 3,650 3,750 3,800 3,875 3,950 3,950 4,200 4,250 4,300 4,350 4,350 4,400 4,500 4,400 4,450 4,350 SBR-1502 CFR NE Asia US$/Metric Ton 2,160 2,125 2,200 2,320 2,300 2,138 1,895 2,119 2,219 2,450 2,800 3,130 3,413 3,788 3,925 3,950 3,940 3,920 3,810 3,770 3,800 3,810 3,800 3,800 SBR-1712 CFR NE Asia US$/Metric Ton 1,900 1,913 2,044 2,090 2,150 1,869 1,710 1,917 1,969 2,183 2,344 2,635 2,882 3,175 3,338 3,450 3,440 3,420 3,310 3,270 3,300 3,310 3,300 3,300 PBR CFR NE Asia US$/Metric Ton 2,520 2,550 2,650 2,765 2,850 2,688 2,520 2,638 2,769 2,925 3,350 3,715 4,088 4,350 4,425 4,400 4,370 4,320 4,290 4,240 4,280 4,290 4,270 4,290

The current and forecast prices presented herein are strictly the opinion of CMAI and Purvin & Gertz and are based on information within the public sector and on assessments by CMAI and Purvin & Gertz staff. CMAI and Purvin & Gertz make no guarantee or warranty and assume no liability as to their use.
Clients can download most current price data at www.cmaiglobal.com

March 28, 2011 / Issue No. 148

Page 4

Asian Outlook For Crude C4s, Butadiene & Synthetic Rubbers

ORDER YOUR COPY NOW!

2011 WORLD BUTADIENE ANALYSIS

Includes online access to CMAIs Supply/Demand & Capacity Databases!
Data p perio resented o d of e v leven er a years 200

The 2011 World Butadiene Analysis will function as your most versatile source of manufacturing, marketing, economic and forecast information.

5 - 20

15

Clients are entitled to a reasonable amount of consulting time and data requests in the respective product area for a period of one year. Access to CMAIs online capacity and supply/demand databases is also included. Clients have the ability to access and download in a spreadsheet format the most up-to-date capacity data for the products covered. Available in book format and CD-ROM format, this annual study comprises a truly extensive collecExcellence & Experience in Consulting Since 1979 tion of data derived from Chemicals - Plastics - Fibers CMAI - Headquarters CMAIs own database. 1401 Enclave Parkway, Suite 700 Houston, TX 77077 USA To order your copy of Tel: 1-281-531-4660 Fax: 1-281-531-9966 CMAIs 2011 World Regional Ofces Butadiene Analysis, Dubai - Dsseldorf - London contact CMAI at cmai@ New York - Shanghai - Singapore - Bangkok www.cmaiglobal.com cmaiglobal.com.

March 28, 2011 / Issue No. 148

Page 5