Vam Prices

28
ACETIC ACID • VINYL ACETATE INCLUDING ETHYL ACETATE, ACETALDEHDE, POLYVINYL ALCOHOL AND ACETIC ANHYDRIDE A MONTHLY ROUNDUP AND ANALYSIS OF THE KEY FACTORS SHAPING WORLD CHEMICAL MARKETS CHEMICAL BUSINESS FOCUS CONTACT: WILLIAM BANN Email: [email protected] ISSUE NUMBER 237 1ST JUNE 2007 Celanese declares force majeure on acetyls due to Texas plant outage Celanese sets 50% global acetyls allocation for 60 days West Europe’s Q2 acetic acid contract prices down Euro20/mt Acetic acid prices continue upward climb in Asia during May Europe ethyl acetate supplies tighten after BP force majeure Global spot methanol market activity at low ebb, prices stagnate Feedstocks Methanex has rolled over its contract price for June at $1.01/gal, but Southern Chemical dropped its contract price by 5 c/gal to 95 c/gal for June. USG spot prices were 68-70 c/gal. In Europe, spot was offered at Euro175/ton fob. In Asia, Methanex rolled over its posted contract price at $320/ton cfr for June. Methanol is generally considered balanced at the end of May. In ethylene, US contract prices settled for April at 43.5 c/lb, an increase of 2.5 c/lb from March. The May contract settled at a further increase of 1 c/lb to 44.5 c/gal. High raw material costs and snug supply have supported ethylene spot prices in Europe. Strong demand from the polyethylene sector has supported prices in Asia. Acetic Acid Celanese declared force majeure on 14 May at its 1.25 million tpa unit at Clear Lake, Texas. Subsequently, Celanese initially placed its customers on 50% allocation for up to 60 days, and held firm on that declaration later in the month after an unplanned outage hit its Pampa, Texas, facility. In western Europe, the Q2 contract price reportedly settled down an average of Euro15- 20/ton compared to Q1. Acetic acid spot prices in Asia rose during May, reaching levels close to $700/ton cfr China Main Port. Vinyl Acetate Celanese placed its global VAM customers on 50% allocation 14 May for up to 60 days following an unplanned outage at the Clear Lake, Texas, acetic acid plant. On 24 May, Dow issued a price increase of 6 c/lb ($132.28/ton) in the US and Canada, and $150/ton in Latin America. In Europe, Dow issued a price increase of Euro110/ton, although contract prices had been expected to fall prior to the price hike talk. VAM prices in Asia topped the $1000/ton level, with deals reported done in mid-to-late May at $1020- 1030/ton cfr Northeast Asia and $10-20 higher in Southeast Asia. Ethyl Acetate US ethyl acetate producers issued price increases for 1 June of 3 c/lb. Celanese placed its global customers on 50% allocation for esters solvents for 60 days following its force majeure declaration on acetic acid. Also, the Celanese acetic acid plant at Pampa was shut in late May. BP declared force majeure on ethyl acetate from Hull, UK, on 1 May due to production problems which began in April. Ethyl acetate prices in Europe reportedly increased by up to Euro20/ton in May. In Asia, prices in most major markets moved up sharply during May due to higher priced feedstocks.

Transcript of Vam Prices

Page 1: Vam Prices

Ac

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cid

• Vinyl A

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inc

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ethyl A

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A Monthly rounduP And AnAlySiS oF the Key FActorS ShAPing World cheMicAl MArKetS

cheMicAl BuSineSS FocuS

CONTACT: WILLIAM BANNEmail: [email protected]

ISSUE NUMBER 2371ST JUNE 2007

celanese declares force majeure on acetyls due to texas plant outage

celanese sets 50% global acetyls allocation for 60 days

West europe’s Q2 acetic acid contract prices down euro20/mt

Acetic acid prices continue upward climb in Asia during May

europe ethyl acetate supplies tighten after BP force majeure

global spot methanol market activity at low ebb, prices stagnate

FeedstocksMethanex has rolled over its contract price for June at $1.01/gal, but Southern chemical dropped its contract price by 5 c/gal to 95 c/gal for June. uSg spot prices were 68-70 c/gal. in europe, spot was offered at euro175/ton fob. in Asia, Methanex rolled over its posted contract price at $320/ton cfr for June. Methanol is generally considered balanced at the end of May. in ethylene, uS contract prices settled for April at 43.5 c/lb, an increase of 2.5 c/lb from March. the May contract settled at a further increase of 1 c/lb to 44.5 c/gal. high raw material costs and snug supply have supported ethylene spot prices in europe. Strong demand from the polyethylene sector has supported prices in Asia.

Acetic Acidcelanese declared force majeure on 14 May at its 1.25 million tpa unit at clear lake, texas. Subsequently, celanese initially placed its customers on 50% allocation for up to 60 days, and held firm on that declaration later in the month after an unplanned outage hit its Pampa, texas, facility. in western europe, the Q2 contract price reportedly settled down an average of euro15-20/ton compared to Q1. Acetic acid spot prices in Asia rose during May, reaching levels close to $700/ton cfr china Main Port.

Vinyl Acetatecelanese placed its global VAM customers on 50% allocation 14 May for up to 60 days following an unplanned outage at the clear lake, texas, acetic acid plant. on 24 May, dow issued a price increase of 6 c/lb ($132.28/ton) in the uS and canada, and $150/ton in latin America. in europe, dow issued a price increase of euro110/ton, although contract prices had been expected to fall prior to the price hike talk. VAM prices in Asia topped the $1000/ton level, with deals reported done in mid-to-late May at $1020-1030/ton cfr northeast Asia and $10-20 higher in Southeast Asia.

Ethyl AcetateuS ethyl acetate producers issued price increases for 1 June of 3 c/lb. celanese placed its global customers on 50% allocation for esters solvents for 60 days following its force majeure declaration on acetic acid. Also, the celanese acetic acid plant at Pampa was shut in late May. BP declared force majeure on ethyl acetate from hull, uK, on 1 May due to production problems which began in April. ethyl acetate prices in europe reportedly increased by up to euro20/ton in May. in Asia, prices in most major markets moved up sharply during May due to higher priced feedstocks.

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

2 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

PRICE MONITOR

US PRICES

28 February 30 March 30 April 31 May 31 May2007 2007 2007 2007 2007¢/pound ¢/pound ¢/pound ¢/pound $/ton

Acetic Acid Domestic* 48.0-52.0 48.0-52.0 48.0-52.0 48.0-52.0 FOB 1058-1146Export 24.0-26.0 26.0-27.0 26.0-27.0 28.0-29.0 FOB 617-639

VAM Domestic 67.0-75.0 67.0-75.0 66.0-74.0 66.0-74.0 FOB 1455-1631Export 42.0-43.0 42.0-44.0 42.0-44.0 42.5-43.5 FOB 937-959

Ethyl Acetate‡ Domestic 33.0-34.0 33.0-34.0 32.0-34.0 32.0-34.0 DEL 705-750

Acetic Anhydrid Domestic 65.0-69.0 65.0-69.0 65.0-69.0 65.0-69.0 DEL 1433-1521

Acetaldehyde Domestic N.A. N.A. N.A. N.A. DEL N.A.

WEST EUROPEAN PRICES

€/ton €/ton €/ton €/ton $/ton

Acetic Acid Contract T2 855-905 855-905 855-905 835-885 DEL 1121-1188

VAM Contract T2 1205-1275 1205-1275 1205-1275 1205-1275 DEL 1617-1711

Ethyl Acetate Domestic 820-850 820-850 840-860 840-860 DEL 1128-1154

Acetic Anhydrid Domestic 1195-1370 1195-1370 1195-1370 1200-1370 DEL 1611-1839

Acetaldehyde Domestic N.A. N.A. N.A. N.A. DEL N.A.

ASIAN PRICES

$/ton $/ton $/ton $/ton

Acetic Acid Taiwan Import 610-630 640-650 630-640 670-680 CFR

VAM Taiwan Import 1040-1060 1050-1070 1020-1050 1020-1050 CFRS Korea Import 1040-1060 1050-1070 1020-1050 1020-1050 CIF

Ethyl Acetate Taiwan Import 930 930 880 920 CFRS Korea Import 930 930 880 920 CIF

N.A. = Not Available ‡ = 8-20 mlb/year direct * = Price for arms length customers

"Contract" prices are quarterly contracts

Current one US dollar equivalent (30 May 2007)€: 0.745 £: 0.506 (1/1.976) Yen 121.5 NT$: 32.98 Won: 931.00 RMB Yuan: 7.65

Current one € equivalent (30 May 2007)US$ 1.365 £: 0.682 (1/1.466) Yen 163.2

The prices we quote are our best estimates. They are free market prices - i.e. prices for arms length merchant transactions. The actual price paid by anindividual customer depends upon order size, terms of trade, geographical location, and customer status. We believe that deals could well have been done atprices lower and higher than the prices we quote. Some readers use our prices as indices and we think this might be the best way to use them. From time to timewe retrospectively change published prices if new information comes to hand. Relative movements in the value of currencies can impact the prices we quote.

Information contained in this report is obtained from sources believed to be reliable, however no responsibility nor liability will beaccepted by Tecnon OrbiChem for commercial decisions claimed to have been based on the content of the report.

Reproduction of any part of this work by any process whatsoever without written permission of Tecnon OrbiChem is strictly forbidden

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

3 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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FeedStocKS

Methanol

there was some temporary tightness in the uS market during the first half of May because one or two ships were delayed. however, during the second half of the month methanol availability has again moved towards the long side of balanced.

there have generally been no disruptions to methanol production in north or latin America other than scheduled maintenance stops already reported. it has been confirmed, however, confirmed that Methanex has shut down one of its four units in chile, because of restrictions in the supply of gas from Argentina. the closure is described as temporary, but it is not clear just how temporary that will be. Methanol spot prices on the uS gulf surged in late April and early May to over 80 c/gal. numbers softened as supply improved and ended the month at 68-70 c/gal. Methanex has rolled over its contract price for June at $1.01/gal: Southern chemical, however, has come down by 5 c/gal to 95 c/gal for June.

the West european methanol market is very quiet at the moment although the general level of demand remains good. Spot product is being offered at around euro175/ton fob but there have been no deals concluded recently. Statoil has begun the one-month scheduled turnaround of its 825,000 tpa plant in norway.

the problems with methanol production in iran are not yet solved. the new 1.65 million tpa Zagross no 1 plant will shut for 10 days beginning on 1 June to deal with mechanical problems. the 1 million tpa Fanavaran plant may now be re-started at some time in June, but this is not certain at the moment. it went down with compressor problems early in April.

Poor netbacks compared with the domestic market are deterring chinese producers from exporting to Korea. Methanex has again rolled over its APcP Asian Posted contract price at $320/ton cfr for June. in April, china was again a net exporter of methanol. With exports of 59,000 tons and imports of 35,000 tons, the gap has closed considerably. nevertheless, imports for the month were down by nearly 40,000 tons compared to the same period last year.

At the end of May, Wti crude is trading at $63-64/bbl and Brent at $68-69/ bbl. Prompt natural gas at the henry hub has been trading at close to $7.50/mmBtu during most of the second half of the month. the near-month contract on the nyMeX was priced at much the same level until the end of May when values started to increase. the June contract expired on 29 May at $7.591/mmBtu and July futures are now trading at $7.90-7.95/mmBtu. the volume of gas in storage on 18 May was 1,946 Bcf, which was 20.7% above the five-year average for the week.

Ethylene

the ethylene contract price in the uS for April was settled at 43.5 c/lb, an increase of 2.5 c/lb from March. high feedstock costs and a strong spot market meant that there was little resistance to producers’ nominated increases. the May contract has been settled at a further increase of 1 c/lb to 44.5 c/gal.

Spot pricing remained strong in late May reaching a peak of 39.75 c/lb, largely influenced by high oil prices. As oil came down by around $2.00/bbl in late May, ethylene spot numbers weakened a little but only to 38-39 c/lb for June. ethane has risen to around 75 c/lb, but it is still the preferred feedstock, yielding the best margin, closely followed by propane.

high raw material costs and snug supply caused by scheduled and unscheduled plant shutdowns have supported ethylene spot prices in europe during May. ineos has declared force majeure on ethylene, propylene and butadiene from its grangemouth, Scotland. site the (smaller) g4 cracker has been down on a planned turnaround since mid-April but faults discovered during the shutdown will keep it down for an additional three months. Spot prices have risen to $1230-1280/ton cif at the coast and to around euro980/ton delivered off the pipeline.

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

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ethyl AcetAteunited StatesWest europechinaAsiaJapan

PolyVinyl Alcohol

Acetic Anhydrideunited StatesWest europe

econoMic neWS

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AcceSS tecnon orBicheM online

Prices for spot ethylene in Asia have increased during May. Strong demand from the polyethylene sector, together with high raw material costs, has supported prices. in the latter part of May naphtha has been trading at around $725/ton. Also, Formosa chemical’s new 1.2million tpa cracker in taiwan, the largest in Asia, is not yet in full production following its start-up on 25 May. Production has not yet stabilised and both ethylene and propylene output are at around 50% of capacity. A cargo for end-June lifting was sold recently at $1070-1089/ton fob Korea.

Acetic Acid

United States

celanese declared force majeure on acetic acid on 14 May from its clear lake, texas, plant, which at 1.25 million tpa of output, accounts for 11% of global capacity. A uSg market source said it believed the plant had been down for a few days prior to the FM declaration. A report filed on the website of the texas commission on environmental Quality states that the unit was shut on 11 May due to a leak in the “reactor shell wall.” celanese would not comment on the exact nature of the operational problem. A celanese spokesman said the company planned to restart the plant by the end of May.

it is estimated that celanese lost between 50,000mt-70,000mt of acetic acid because of the outage, which is about 20% of total uS output for one month. (total uS output is projected at about 3 million tons for 2007.)

Along with the FM declaration, celanese placed its global customers on 50% allocation for acetic acid, vinyl acetate monomer, acetic anhydride and esters solvents for 60 days. it is understood that allocation levels will be re-evaluated once the acetic acid plant is restarted and running normally.

in late May, market participants were waiting anxiously for any news about the status of the clear lake unit. talk was heard that celanese attempted to restart the plant 24-25 May, but did not achieve stable production rates and brought the unit down again. A celanese spokesman said they were still planning to restart the unit by the end of the month; however, at the time of publication, the unit had not yet restarted.

the news did not get better for celanese in late May. the 250,000 tpa acetic acid plant at Pampa, texas, was knocked off-line late 24 May by a fire that struck a utility provider at the Pampa facility, according to a report filed on the tceQ website. A celanese spokesman confirmed the plant was down, but that there was no damage to the acetic acid plant itself, and no employees were injured. the acetic acid unit reportedly remained shut at the end of May, resulting in at least seven days lost production.

With the global acetic acid balances already trending toward the tight side of balanced for the rest of 2007, acetic acid market participants were increasingly concerned about the outlook for the rest of the year. if the clear lake plant restart is delayed into June, for example, then celanese and others could scramble to build adequate inventories ahead of an already packed turnaround schedule in the second half of 2007.

While much of the news was generated from the supply side, uS market sources reported steady, but not spectacular, demand from various derivative markets. uS acetic acid producers also reported receiving inquiries for spot volumes in mid-May from not only their usual customers but from other buyers and traders. Most suppliers pulled back from the market and did not offer significant spot volumes due to lack of available material in their own systems.

UNITED STATES ACETIC ACID IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

23 1,745 28 Others 62 28 62 Total 23

$/ton figures are calculated from customs data and may not reflect market prices

Page 5: Vam Prices

Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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FeedStocKSMethanolethlylene

Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

Vinyl AcetAte MonoMerunited StatesWest europechinaAsiaJapanconsumption and Production

ethyl AcetAteunited StatesWest europechinaAsiaJapan

PolyVinyl Alcohol

Acetic Anhydrideunited StatesWest europe

econoMic neWS

coMPAny neWS

AcceSS tecnon orBicheM online

Both eastman and BP announced 2 c/lb increases for acetic acid, effective 1 June, for north America, or $44/ton for central and South America. celanese issued $50/ton increase (essentially 2.25 c/lb) in the Americas, effective 1 May, on 26 April (as reported in the 1 May newsletter). there was no consensus heard in late May regarding a contract settlement due to the recent nature of the price increases.

initially, many market sources said the May price increase was an effort to keep prices stable through the quarter, offsetting sharp decreases in methanol seen at the start of the quarter. But with additional pressure coming from the supply side, acetic acid buyers are looking at paying higher prices for any incremental purchases. if consumers were waiting until the end of May to finalise quarterly contracts, perhaps thinking that prices would continue falling during the quarter, then they are likely seeing higher prices than they expected. Market participants also anticipated the likelihood of further price increase in the third quarter.

0

250

500

750

1000

1250

1500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

US, WEST EUROPEAN AND TAIWANESE

Source: Tecnon OrbiChem

ACETIC ACID PRICESUS Dollars per Ton

US Domestic

WE Contract

TW Import

FOB

DEL

CIF

UNITED STATES ACETIC ACID EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

2,204 870 5,421 Canada 8,093 17,050 808 44,517 Mexico 58,048

- - 1,800 Argentina 2,108 8,844 501 14,295 Brazil 21,374 2,309 680 2,309 Colombia 2,641

101 899 193 Honduras - 150 750 150 Venezuela 14

19,042 477 36,996 Belgium 26,756 983 590 983 Italy 3,837

1,080 590 5,561 Netherlands 6,239 11,678 476 32,504 Spain 23,413

103 3,316 103 Nigeria - 1,574 630 1,574 South Africa 1,001 7,025 464 10,588 China 12,511

1 2,936 1 South Korea 18,191 2,003 433 4,107 Taiwan 2,626

- - 2 Japan 2,499 217 2,146 302 Others 129

161,406 189,480 Total 74,364

$/ton figures are calculated from customs data and may not reflect market prices

Page 6: Vam Prices

Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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FeedStocKSMethanolethlylene

Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

Vinyl AcetAte MonoMerunited StatesWest europechinaAsiaJapanconsumption and Production

ethyl AcetAteunited StatesWest europechinaAsiaJapan

PolyVinyl Alcohol

Acetic Anhydrideunited StatesWest europe

econoMic neWS

coMPAny neWS

AcceSS tecnon orBicheM online

Europe

Acetic acid market conditions in europe were not completely dissimilar to those experienced in other global regions – tightly balanced supplies and steady demand – but pressure from feedstock methanol helped drive Q2 2007 acetic acid contracts lower.

Market participants confirmed in mid-May that Q2 contracts fell by an average of euro15-20/ton compared to Q1. Producers acknowledged the price decreases were inevitable given the massive decrease in methanol contract prices at the beginning of the quarter. those prices settled at euro250/ton fob, down by euro170/ton, or 40.5%, from Q1. As mentioned in the feedstock section, spot methanol offers in europe were lower still at euro175/ton fob. Market participants did not want to speculate on the possible direction of the Q3 methanol contract, but said acetic acid prices would likely be influenced much more by supply/demand concerns rather than feedstock in the coming months.

Questions about the status of celanese’s plants at clear lake and Pampa, texas, (as discussed above) loomed large at the end of May. directly after the force majeure declaration was issued, some european market sources expressed doubt that it would have lingering impact – especially if the clear lake plant restarted at the end of May as expected. But, the longer both plants are shut, the more likely it is that the european market will feel an impact as import volumes become less available.

Serbia’s MSK Kikinda was scheduled to restart from a scheduled turnaround at the end of May, but no confirmation was received prior to publication. the 100,000 tpa plant has been down during most of May after the company reportedly moved a scheduled turnaround forward from Q3.

the 160,000 tpa Azot nevinnomyssk acetic acid plant in russia reportedly will be shut for a maintenance turnaround in June, but the duration of the outage was not confirmed. the plant is owned by eurochem.

BP will move its global acetyls headquarters from Sunbury, just outside london, to china, a company spokesman confirmed in late May. According to the company spokesman, about seven to eight key staff member will move to Shanghai, although no timeframe was discussed. BP is the second major global acetyls producer to announce such a move in the past six months. in december 2006, celanese said it would move its acetyls management staff to Shanghai by the end of the first half of 2007.

China

the usual supplies of imported acetic acid already were considered tight at the beginning of May, and the unplanned shutdown of the celanese plant at clear lake, texas, and subsequent force majeure has made supplies even tighter.

At the end of May, it is understood there were very few cargoes available for sale in Jiangsu and Zhejiang, east china. in early May, import prices had risen to $690/ton cfr china Main Port, and increased further to $700-710/ton at the end of May. there were even quotes of $750/ton cfr china Main Port at the end of May.

it is understood that a cargo of 4,000 tons from iran due to arrive in Jiangyin at the end of May was ordered at $610/ton cfr china Main Port in early April. At the end of May, export offers from east china

CHINESE ACETIC ACID EXPORTS

Tons $/Ton Tons TonsMarch 2007 Jan-Mar 07 Jan-Mar 06

105 705 105 Egypt - 8,396 490 8,456 India -

147 715 294 Pakistan 42 - - 16 Thailand 1,955

262 779 444 North Korea 502 - - 17 Taiwan 2,006

88 922 1,137 Others 1,468 10,469 5,973 Total 8,998

$/ton figures are calculated from customs data and may not reflect market prices

Page 7: Vam Prices

Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

7 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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FeedStocKSMethanolethlylene

Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

Vinyl AcetAte MonoMerunited StatesWest europechinaAsiaJapanconsumption and Production

ethyl AcetAteunited StatesWest europechinaAsiaJapan

PolyVinyl Alcohol

Acetic Anhydrideunited StatesWest europe

econoMic neWS

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AcceSS tecnon orBicheM online

CHINESE ACETIC ACID IMPORTS

Tons $/Ton Tons TonsMarch 2007 Jan-Mar 07 Jan-Mar 06

3,567 511 9,096 United States 14,278 21,982 593 42,494 Malaysia 5,012 28,360 589 77,356 Singapore 78,508 7,177 592 23,185 South Korea 13,003 3,403 605 13,146 Taiwan 3,631 1,916 590 1,917 Japan 1,755

20 1,224 49 Others 139 167,243 116,326 Total 66,425

$/ton figures are calculated from customs data and may not reflect market prices

CHINESE ACETIC ACID EXPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 2.3 0.6 788 0.7 870 Feb 0.2 2.5 606 0.8 898 Mar 3.6 2.8 609 9.0 509 Apr 3.3 2.2 602 - - May 3.3 1.1 767 - - Jun 0.3 9.9 551 - - Jul 0.4 1.6 656 - - Aug 0.4 0.7 766 - - Sep 2.2 0.8 741 - - Oct 8.1 0.8 765 - - Nov 0.3 0.6 801 - - Dec 11.3 5.2 575 - -

$/ton figures are calculated from customs data and may not reflect market prices

35.6 28.8 108.6 (19.1)

Jan-Dec% Change

6.1 626 10.5 562 515.4 (2.2) 75.3

Jan-Mar% Change

6.0(10.2)(27.2)

CHINESE ACETIC ACID IMPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 36.9 49.4 534 56.9 526 Feb 34.7 27.2 537 43.9 585 Mar 47.9 39.7 544 66.4 588 Apr 44.2 59.5 512 - - May 52.8 52.9 491 - - Jun 48.7 65.3 515 - - Jul 43.8 64.9 523 - - Aug 54.8 102.7 496 - - Sep 53.1 66.4 486 - - Oct 29.8 60.3 491 - - Nov 44.6 63.1 521 - - Dec 51.7 55.9 517 - -

$/ton figures are calculated from customs data and may not reflect market prices

542.9 707.3 3.3 30.3

Jan-Dec% Change

119.5 538 167.2 566 (25.1) (2.6) 43.8

Jan-Mar% Change

116.3 5.2(16.8)

Page 8: Vam Prices

Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

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PolyVinyl Alcohol

Acetic Anhydrideunited StatesWest europe

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were quoted at $620/ton fob china Main Port, an increase of $10-20/ton from last month. offers to india were quoted at $590/ton fob china Main Port. domestic chinese producers reportedly would prefer to sell inside china rather than export at current domestic prices.

domestic prices have increased in east and South china at the end of May compared to that of April. in the final week of May, acetic acid prices were quoted at rmb6900/ton ex-tank in Jiangsu (Jiangyin and nantong), and rmb7000-7100/ton ex-tank in Zhejiang (ningbo); prices in South china were quoted at rmb7200-7300/ton ex-tank. Market prices in north china have increased to rmb6800-6900/ton. Market prices in northeast china have increased to rmb7100/ton.

ex-works offers at the end of May were at rmb6800/ton from Jiangsu Sopo, rmb6900/ton from Shanghai Wujing, rmb6700/ton from yankuang cathay, rmb7000/ton from Ji’an Shenghua, and rmb7100/ton Jilin Petrochemical.

TAIWANESE ACETIC ACID EXPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 1.0 3.1 628 8.9 536 Feb 2.9 1.0 784 8.6 571 Mar 5.2 2.6 692 - - Apr 3.3 2.6 693 - - May 5.8 7.7 564 - - Jun 6.7 11.2 531 - - Jul 4.0 11.5 540 - - Aug 4.2 14.9 502 - - Sep 3.5 12.8 540 - - Oct 5.6 5.9 552 - - Nov 2.7 17.8 516 - - Dec 2.4 11.0 538 - -

$/ton figures are calculated from customs data and may not reflect market prices

47.1 102.1 109.1 116.6

Jan-Dec% Change

3.8 666 17.5 553 (2.2) 7.3 326.3

Jan-Feb% Change

4.1(17.0)(5.8)

TAIWANESE ACETIC ACID EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

200 725 442 Australia 132 107 847 281 Bangladesh 101 178 811 259 Indonesia 121 181 709 403 Pakistan 302

7,488 542 14,660 China 2,195 101 741 302 Hong Kong 304 367 769 1,158 Others 952

17,505 4,107 Total 8,622

$/ton figures are calculated from customs data and may not reflect market prices

TAIWANESE ACETIC ACID IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

9,445 469 9,445 United States 11,436 17,205 474 17,205 Malaysia 36,771 1,004 500 4,432 Singapore 8,123

17 1,122 17 China 3,961 34 1,251 1,081 Japan 1,385 22 1,206 22 Others 62

32,202 61,738 Total 27,727

$/ton figures are calculated from customs data and may not reflect market prices

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Sopo has now indicated that the new 600,000 tpa plant will start up in the first half of 2009, and, in the mean time, a new facility is being built to produce carbon monoxide from coal. Praxair will build an air separation facility, supplying oxygen. At the end of June, Jiangsu Sopo will have a planned maintenance shutdown of the 250,000 tpa line for 10-12 days, and the 350,000 tpa line for 15 days. the 350,000 tpa line will then be debottlenecked to 400,000 tpa, raising its total capacity to 650,000 tpa.

Sopo has indicated that they might delay the turnarounds for a month, but that is not decided yet. it is understood that Sopo exports acetic acid under certain contracts in the range of 3,500-4,500 tpm, depending on the market condition. they have exported 4,000 tons in May. Sopo sources methanol internationally.

Shanghai Wujing has been operating the 230,000 tpa plant at 50-67% since early May due to engineering works at the co facility of Shanghai coking. the co facility is being debottlenecked for the new 300,000 tpa acetic acid plant. it is expected that the 230,000 tpa plant will return to full operations rate in early June when the engineering works are completed.

Shanghai Wujing has now confirmed that it will shut down the old 230,000 tpa plant when it starts production at its new 300,000 tpa facility at the end of June. Shanghai coking produces coal-based methanol in Shanghai with a capacity of 350,000 tpa. they currently supply 9,000 tpm methanol to Shanghai Wujing. they will start up a new methanol plant with a capacity of 450,000 tpa at the end of 2007. they are also going to add another carbon monoxide production unit and a new pipeline for the new acetic acid capacity in 2008 or thereafter. Shanghai Wujing would then bring its total acid capacity to 530,000 tpa. Shanghai Wujing and Shanghai coking both belong to Shanghai huayi.

yaraco restarted its 400,000 tpa plant in chongqing on 21 May, after a 10-day shutdown which is mainly due to short gas supplies. yuhuai railway was open on 18 April for passengers, and it is expected that it will be available for freight at the end of 2007.

celanese has been trying to start up its new 600,000 tpa plant at nanjing since March, market participants said, and the last trial was on 18 May. it is understood that there were problems with carbon monoxide supplies. Wison nanjing chemical company supplies all the methanol and carbon monoxide they produce to celanese as it has a 200,000 tpa methanol plant and a 300,000 tpa carbon monoxide plant at the same site. celanese has indicated that commercial product will be available from the plant in early June.

yankuang cathay shut down its 200,000 tpa plant on 26 May, for a planned maintenance of 10-20 days (longer than earlier indication). it has indicated that the plant will be debottlenecked to 300,000 tpa at the end of 2007.

daqing Petroleum Administration Bureau has now indicated that its new 200,000 tpa acetic acid facility will be on stream at the end of July, later than expected. it is understood that the construction of the plant has

TAIWANESE ACETIC ACID IMPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 29.3 29.0 427 4.5 525 Feb 11.7 32.7 431 27.7 475 Mar 31.5 2.8 629 - - Apr 19.1 43.7 475 - - May 21.7 17.0 488 - - Jun 27.6 30.8 470 - - Jul 24.9 12.2 491 - - Aug 18.2 20.9 478 - - Sep 12.3 11.3 493 - - Oct 31.6 12.1 487 - - Nov 37.8 3.2 578 - - Dec 18.4 4.1 545 - -

$/ton figures are calculated from customs data and may not reflect market prices

283.8 219.8 (13.9) (22.6)

Jan-Dec% Change

41.0 429 32.2 482 (38.4) 50.7 (47.8)

Jan-Feb% Change

61.7 12.4(15.0)

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almost been completed. Petrochina will have a final check in July before it starts production. the company is considering plans to double capacity at the site within the next 2-5 years, and may also build a 300,000 tpa VAM facility once it has expanded its acid capacity.

henan lantian group, a methanol producer based in Zhumadian, henan Province, has planned to build a 200,000 tpa acetic acid plant. it is understood that they are waiting for government approval, and are expecting to get the approval in 2008.

guizhou crystal has indicated it will start up the new 36,000 tpa acetic acid plant at the end of 2007, and will import equipment starting in August. chiyoda will provide its new Acetica technology to the plant. the plant will be linked to VAM and PVoh production. currently, guizhou crystal produces VAM at 45,000 tpa and PVoh at 30,000 tpa. VAM and PVoh capacities will be expanded to 70,000 tpa and 35,000 tpa, respectively, when the new acetic acid plant comes on stream at the end of 2007. By then, they will have 23,400 tpa acetic acid, 7,000 tpa VAM and 35,000 tpa PVoh available. Market participants have said they believe 1 ton PVoh production co-produces 1.1 tons acetic acid from their plant.

Shandong Jinyimeng has clarified that its ethanol-based acetic acid capacity is at 110,000 tpa, a bit more than earlier indication of 100,000 tpa. Since the second half of April, they have been producing acetic acid at 80,000 tpa and acetaldehyde at 30,000 tpa. however, they are still buying acetic acid on the market, as acetic acid is used for a 180,000 tpa ethyl acetate plant which will be expanded to 200,000 tpa in July, a 80,000 tpa butyl acetate plant (they started up a new 80,000 tpa plant in April, and shut down the old 20,000 tpa at the same time. the new 80,000 tpa plant has been operating at 70%). Shandong Jiyimeng expects to start up a crop-based butanol plant in october, with a capacity of 30,000 tpa. it also expects to start up a new anhydride plant at 50,000 tpa in october, which would be further expanded to 150,000 tpa in 2008.

Ji’an Shenghua brought the second acetic acid line on stream on 15 May, raising its daily output to 400 tpd. however, the whole acetic acid plant was shut down on 17/18 May due to maintenance and also some environmental issues on the 400,000 tpa ethanol plant. the acetic acid plant is expected to restart in early June. Ji’an Shenghua produces ethanol with a capacity of 600,000 tpa at two plants, one at 200,000 tpa and the other at 400,000 tpa. the ethanol is produced from maize. the company is also looking into the possibility of producing ethanol from sorghum.

Jilin Petrochemical has been running its 210,000 tpa ethylene-based acetic acid plant at 60-70%. the plant was shut down for maintenance on 22 May, and is expected to restart 3 June. half of the acetic acid is used captively to make acetic anhydride at 60,000 tpa. Anhydride production is still at full operations rate.

yangzi Petrochemical restarted its ethylene-based acetic acid plant on 5 April, producing at 230 tpd. however, all the acid is used captively for its PtA production with a total capacity of 1.3 million tpa. it is understood that the ethylene-based acetic acid plants of Shanghai Petrochemical and daqing Petrochemical are still being mothballed, although Shanghai Petrochemical is producing acetaldehyde.

Asia

Acetic acid prices in other parts of Asia strengthened again in early May as scheduled and unscheduled outages tightened the regional supply balance, and then moved up further mid-month following the celanese news.

Price ideas were reported at $680-700/ton cfr northeast Asia and $670-680/ton cfr Southeast Asia at the time of writing on 25 May, but lack of availability was keeping markets quiet. A week earlier, deals were reported done at $680/ton cfr northeast Asia and $670/ton cfr Southeast Asia. these levels are $35-55/ton up from the $635-645/ton cfr northeast Asia and $630-640/ton cfr Southeast Asia reported done in the last week of April.

indian prices have also strengthened further in the last month, but remain well below prevailing regional levels despite the continuing unscheduled outage of the 150,000 tpa Fanavaran Petrochemical plant in iran. enquiries from indian buyers are understood to be capped at $620-630/ton cfr india in late May, $10-20/ton higher than late-April bids. latest indications as this newsletter was finalised were that the iranian plant was being restarted in late May.

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As anticipated, the finely balanced supply situation across Asia is proving the decisive factor in the market in Q2 and this looks certain to continue through Q3. A heavy round of scheduled shutdowns will keep the supply side taut.

At the same time, continuing unscheduled shutdowns as well as uncertainties over the onstream timing of substantial new chinese capacities make the outlook difficult to forecast with certainty.

celanese is understood to have shut its 600,000 tpa plant in Singapore for four days in mid-May. BP Petronas Acetyls shut its 550,000 tpa plant in Malaysia for four days in mid-April and a further four days in mid-May, also because of carbon monoxide supply problems.

Formosa BP has delayed the three-week turnaround at its 300,000 tpa plant in taiwan to end-May to enable it to manage high methanol inventories. taiwan’s cPdc has confirmed it has also put back the 35-day maintenance turnaround at its 140,000 tpa plant to 9 July because of a change in upstream shutdown dates by cPc. celanese Singapore is expected to take a 25-day turnaround at its 600,000 tpa Singapore plant from mid-July.

in addition to these, maintenance shutdowns planned in Q2 and Q3 in china and Japan will further tighten the regional balance (see china and Japan sections).

At the same time, more than 1 million tpa of new capacity is expected on stream in the next two quarters in china, as celanese starts up its 600,000 tpa plant in nanjing, Shanghai Wujing starts up its 300,000 tpa expansion, and daqing starts up its delayed 200,000 tpa plant (see china section). the timing of these new starts will be crucial for what is now a finely balanced supply situation.

the extent to which global suppy is tight is illustrated vividly by the steady increases in acetic acid pricing in recent months, in stark contrast to continuing sharp reductions in methanol pricing. Asian spot methanol prices have slipped further in the last month, and were reported at $235-240/ton cfr taiwan on 25 May, down from $260-270/ton cfr northeast Asia in late April. it is understood that chinese methanol exports have come to a halt in May, following five consecutive months in which volumes as high as 20,000-30,000 ton/month have been moved from the mainland.

the demand side of the equation is also a continuing source of uncertainty for acetic acid going forward. PtA demand remains firm, but efforts to raise VAM prices have consistently failed in the last month, and solvents markets are described as poor once again.

SOUTH KOREAN ACETIC ACID EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

102 851 122 Bangladesh 113 20 774 20 Pakistan 2,021

680 604 860 Philippines 991 8,150 523 13,855 China 7,026

- - 8 Taiwan 9,337 841 600 1,660 Japan 1,621 103 820 222 Others 180

16,747 21,289 Total 9,896

$/ton figures are calculated from customs data and may not reflect market prices

SOUTH KOREAN ACETIC ACID IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

2,500 585 2,500 Malaysia 2,646 300 620 3,300 Singapore 2,482

2,500 564 5,403 Japan 2,903 102 618 303 Others 1,039

11,506 9,070 Total 5,402

$/ton figures are calculated from customs data and may not reflect market prices

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the polyester sector has remained healthy for a further month in May, and PtA margins have continued at acceptable levels following the stiff losses of Q4 2006 and Q1 2007. PtA spot prices were reported at $950-960/ton cfr china in the last week of May, up from $920-930/ton cfr china in the last week of April. A series of scheduled shutdowns in Southeast Asia and india in the last month has kept supply firm and supported sentiment in the sector.

increases in paraxylene (PX) prices in the last month appear to have lent support to stronger PtA numbers, rather than eating into margins as was the case earlier in the year. however, markets had yet to react at the time of writing to the nomination by leading producers for June PX contracts at $1290-1300/ton cfr Asia, representing a $125/ton increase over May contract levels.

nonetheless, the major tranche of new chinese PtA capacity brought on stream in recent months means an incremental increase in demand for acetic acid from the sector, regardless of the state of operating rates.

however, VAM demand has weakened in the last month, and efforts to raise prices have failed despite a series of shutdowns and cutbacks as well as the relentless cost push from both ethylene and acetic acid. Prices have remained steady in both the regional and the chinese domestic market in the last month.

At the time of writing, global and regional VAM producers were preparing to increase prices for June by $100-150/ton, in the wake of the celanese force majeure declaration. But the lack of responsiveness of the sector to upstream cost increases in the last month has left many in the market perplexed.

Solvents markets also have softened further because of high feedstock pricing and poor demand further downstream. chinese operating rates are reported at only 60-70% in late May.

ethyl acetate prices have moved up $70/ton in recent weeks with offers reported at $970-980/ton cfr northeast/Southeast Asia on 25 May, reflecting higher feedstock prices, particularly naphtha. chinese exports were being offered at $850/ton fob china in the third week of May, up from $820/ton fob china in April. estimates of domestic demand for ethyl acetate range from 500,000 ton/year to 700-800,000 ton/year, while domestic production capacity is now assessed at more than 1m tpa, with a number of debottlenecks and capacity expansions planned.

Japan

the biggest topic in the acetic acid market in May was the outage of celanese’s acetic acid plant in clear lake, texas in mid May and ensuing announcement of the force majeure throughout its acetyls chain at 50% allocation for two months. Asian acetic acid markets reacted to this immediately and spot offers jumped to over $700/ton cfr up to $710-720/ton cfr. however, actual transaction prices have not risen so much, by only $20-30/ton as compared to prices before this event. Acetic acid consumers appear to be unable to absorb such high prices. Actual spot prices are currently around $660-670/ton cfr in Asia, although suppliers continue to offer higher prices such as $710-720/ton cfr.

A majority of Q1 2007 PtA contracts reportedly settled at an increase of $25-30/ton compared to Q4 2006. While information on the Q2 price is not available yet, acetic acid producers expect that the contract price could be increased as supply of acetic acid in Q2 has been highly restricted due to unplanned shutdowns and a number of planned shutdowns in Asia. in Japan, Kyodo Sakusan’s Aboshi plant will be shut until mid-June.

Japanese Supply of Acetic Acid (tons)

Apr 07 % Change Jan-Apr 07 % Change (06/05) (06/05) Production 52,998 22.4 213,766 8.6 Shipment 45,180 0.5 181,367 4.5 inventory 7,731 9.1 *** ***

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Consumption and Production

Plant outages around the world are believed to include those in the following table. they are not necessarily confirmed or otherwise by the producers concerned.

Company/Plant Period Length Capacity Lost (days) (000 tons) 2007 cPdc, taiwan dec/January 35 14 Formosa BP January 3 2 yankuang cathay, china January 5 2 celanese, Singapore Q3 14-21 24-36 Samsung BP April 7 9-10 Kikinda, Serbia Apr-May 45-60 12 gnVF, india h1 April 5 2 Fanavaran, iran mid April n.A. n.A. Samsung BP, ulsan, SK April 7 8-9 Formosa BP, taiwan mid-May 21 17 celanese, clear lake, uS h1 May 20 n.A. celanese, Pampa, uS late May 7-8 n.A. cPdc, taiwan mid-June 35 13 Jiangsu Sopo, china end June 10-12 7-8 Jiangsu Sopo, china end June 15 14 yankuang cathay, china end May 7 6 Kyodo Sakusan, Japan mid May 35 40 celanese Singapore Q3 25 42 celanese, clear lake, uS Q3 n.A. n.A. celanese, Pampa, uS Q3 n.A. n.A. celanese, calvert city, uS Q3 n.A. n.A. Millennium, uS october 31 46 daicel, ohthake october n.A. n.A.

JAPANESE ACETIC ACID EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

400 519 1,059 Indonesia 1,672 2,002 488 2,002 Malaysia - 1,001 526 1,001 Thailand 4,122 1,002 507 1,002 China 3 2,500 547 5,002 South Korea 2,202 1,051 541 1,117 Taiwan 1,353

10 2,058 40 Others 27 11,223 9,379 Total 7,966

$/ton figures are calculated from customs data and may not reflect market prices

JAPANESE ACETIC ACID IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

1,200 584 1,200 Malaysia - 1,047 579 2,096 Singapore 1,050

837 624 1,631 South Korea 1,608 - - - Others 74

4,927 2,732 Total 3,084

$/ton figures are calculated from customs data and may not reflect market prices

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United States

the force majeure declaration on acetic acid made by celanese on 14 May had an immediate impact on the vinyl acetate monomer market. celanese placed its global VAM customers on 50% allocation for up to 60 days, although it is understood that allocation levels will be re-evaluated once the acetic acid plant is restarted and running normally. however, as discussed in the acetic acid section, the clear lake plant was not operational at the time of publication. Also, celanese is waiting to restart its Pampa, texas, plant, which was taken off-line 24 May following a fire at an associated utility plant on site.

celanese has a 310,000 tpa VAM plant at the integrated clear lake site, as well as a 300,000 tpa plant at Bay city, texas, which is 75 miles south of clear lake. celanese also operates a 115,000 tpa VAM plant at cangrejera, Mexico, and is the largest marketer of VAM into South America, according to market sources.

the primary concern facing VAM market participants is the duration of the force majeure and associated allocation. Although there was no damage to the VAM plant at clear lake, any delay in restarting the acetic acid unit would start having a trickle-down effect into the derivatives markets. one VAM consumer said that it had not noticed any difficulty sourcing product in the first days following the allocation, but said

UNITED STATES VAM IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

- - 250 Mexico 2,920 - - - Taiwan 11,124

34 1,430 34 Others 44 284 14,088 Total 34

$/ton figures are calculated from customs data and may not reflect market prices

UNITED STATES VAM EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

4,958 1,034 10,370 Canada 12,027 1,700 913 3,240 Mexico 2,332

939 954 939 Argentina 300 1,258 692 1,886 Brazil 1,852

577 964 1,297 Chile 2,032 1,109 1,041 3,122 Colombia 2,247

158 1,033 297 Costa Rica 157 209 1,080 209 Ecuador 164 289 1,091 1,603 Peru 972

1,276 1,016 1,888 Venezuela 1,433 3,498 842 7,074 Belgium 1,499 3,089 950 3,089 Germany -

435 1,016 435 Italy 4,061 - - 4,598 Netherlands 6,296 - - - United Kingdom 1,045 - - - Egypt 1,000 - - - Jordan 1,200 - - - Saudi Arabia 1,000

2,069 985 2,069 Turkey 4,194 1,996 1,038 2,745 UAE 2,381

248 931 248 New Zealand - 1,078 830 2,095 Singapore - 2,455 793 5,714 China 44 1,000 856 1,000 South Korea 5,235

50 1,487 1,152 Others 485 55,070 51,956 Total 28,391

$/ton figures are calculated from customs data and may not reflect market prices

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that could change if the plant outages last for any length of time. Another VAM market participant said it did not believe there would be any net effect to the market as a result of the allocation levels.

Market participants did not agree completely on the status of demand in the uS market. While no one necessarily spoke of demand as strong, some sources characterized demand as steady. however, with the downturn in the uS housing market deepening, one source said it believed demand for VAM in paint formulations was suffering.

on 24 May, dow issued a price increase of 6 c/lb ($132.28/ton) in the uS and canada, and $150/ton in latin America, with immediate effect or “as otherwise allowed by individual contract terms.” the amount of the increase was what caught the eye of most market sources, not necessarily the fact that a price increase had been issued. Most market participants said they did not think the increases had much chance of sticking in Q2, but agreed producers might find more support for price hikes in July.

West Europe

As with acetic acid, european vinyl acetate monomer market participants were particularly interested in the status of celanese’s uS acetyls production at the end of May. But, there was a general wait-and-see approach taken since the situation still was developing.

Market participants did not agree with regard to the overall impact of the celanese allocations. talk was heard that there were no supply disruptions in europe as a result of the announced VAM allocation levels. import/export statistics were not available yet for the month of May, but it is likely that contract volumes were shipped prior to the plant outage at clear lake. however, another supplier said it began receiving inquiries from outside its usual customer base almost immediately upon hearing about the allocations.

on 24 May, dow issued a price increase of euro110/ton in europe, and $150/ton in the Middle east/Africa, with immediate effect or “as otherwise allowed by individual contract terms.” in contrast, market participants said in mid-May they expected Q2 european contract prices to decrease by as much as euro25-30/ton compared to Q1. Final contract settlements are not expected until early June.

BP reported that its VAM plant at hull, uK, is operating at normal rates following an unplanned outage that lasted from mid-April until early May.

China

chinese domestic vinyl acetate monomer prices increased in the final week of May compared to that of April due to short domestic supplies and increases of acetic acid prices. two main domestic suppliers of VAM, Shanghai Petrochemical and Sichuan Vinylon Works, have been shut down for maintenance in May.

in the final week of May, prices in east china increased to rmb10,200/ton ex-tank; prices in South china increased to rmb10,300/ton ex-tank; market prices in north china increased to rmb10,000-10,200/ton. import prices have increased to $1040-1050/ton cfr china Main Port, and there were few cargoes at the ports available for sale.

Beijing organic has still been operating at 80%, and will have a planned shutdown in July/August to change catalysts. it is planning a second 100,000 tpa VAM plant at yanshan, hebei Province, with construction beginning in 2008. the original 100,000 tpa plant will be shut down at the end of 2007 or Q1 2008, and moved to yanshan, hebei Province in 2008 because of the Beijing olympics.

Shanghai Petrochemical reportedly shut its 120,000 tpa VAM plant in mid-May for a three-week planned maintenance. VAM from the 20,000 tpa line is marketed in east china, while 80-90% of the output from the 100,000 tpa line is used captively.

Sichuan Vinylon Works shut its 200,000 tpa VAM plant, linked the VAM plant was shut down on 30 April for a one-month maintenance, and is expected to restart in early June. Sichuan Vinylon Works reportedly will add a new 300,000 tpa VAM plant and a new 60,000-80,000 tpa PVoh plant in 2009.

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CHINESE VAM EXPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 0.1 - 1,020 - 1,276 Feb - - 875 - 1,144 Mar 0.3 - 956 0.1 1,022 Apr 0.2 - 1,072 - - May 0.1 - 1,070 - - Jun 0.2 - 1,759 - - Jul 0.2 - 1,204 - - Aug 0.1 - 1,266 - - Sep - - 1,454 - - Oct - - 1,607 - - Nov - - 1,132 - - Dec - - 1,922 - -

$/ton figures are calculated from customs data and may not reflect market prices

1.3 0.3 (54.2) (75.0)

Jan-Dec% Change

0.4 925 0.1 1,094 (66.1) (85.9) 119.1

Jan-Mar% Change

0.118.3(7.1)

CHINESE VAM IMPORTS

Tons $/Ton Tons TonsMarch 2007 Jan-Mar 07 Jan-Mar 06

3,309 963 5,266 United States 988 3,395 999 15,437 Singapore 18,182 1,001 897 3,302 South Korea 4,170 8,058 984 28,352 Taiwan 13,143 5,481 991 16,604 Japan 10,829

- - - Others 10 68,961 47,322 Total 21,244

$/ton figures are calculated from customs data and may not reflect market prices

CHINESE VAM IMPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 7.7 12.9 836 27.1 953 Feb 8.4 13.0 837 20.6 962 Mar 15.7 21.4 905 21.2 981 Apr 14.3 13.1 936 - - May 12.0 16.7 918 - - Jun 14.4 22.8 922 - - Jul 10.5 13.8 925 - - Aug 11.8 22.7 935 - - Sep 17.3 20.1 934 - - Oct 14.5 19.0 949 - - Nov 9.9 20.9 959 - - Dec 16.1 18.5 953 - -

$/ton figures are calculated from customs data and may not reflect market prices

152.5 214.9 3.6 40.9

Jan-Dec% Change

31.8 867 69.0 964 (38.7) 48.7 45.7

Jan-Mar% Change

47.3 11.2(10.3)

CHINESE VAM EXPORTS

Tons $/Ton Tons TonsMarch 2007 Jan-Mar 07 Jan-Mar 06

74 1,018 123 Others 56 123 56 Total 74

$/ton figures are calculated from customs data and may not reflect market prices

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

17 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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Anhui Wanwei has a 90,000 tpa VAM plant and a 80,000 tpa PVoh plant. it is understood that it has plans to add a new PVoh line with a capacity of 100,000 tpa.

currently, guizhou crystal produces VAM at 45,000 tpa and PVoh at 30,000 tpa. VAM and PVoh capacities will be expanded to 70,000 tpa and 35,000 tpa, respectively, when the new 36,000 tpa acetic acid plant comes on stream at the end of 2007. By then, they will have 23,400 tpa acetic acid, 7,000 tpa VAM and 35,000 tpa PVoh available. it is understood that 1 ton PVoh production co-produces 1.1 tons acetic acid from their plant.

it is understood that Jiangsu Sopo is planning a VAM project with a capacity of 300,000 tpa, and also a monochloracetic acid project with a capacity of 40,000 tpa.

TAIWANESE VAM EXPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 3.3 13.9 864 24.9 912 Feb 3.1 18.3 839 17.5 930 Mar 0.3 18.3 871 - - Apr 5.7 9.0 907 - - May 1.9 19.2 890 - - Jun 0.2 10.9 883 - - Jul 0.1 7.9 919 - - Aug 3.1 20.3 886 - - Sep 4.8 19.7 912 - - Oct 3.4 7.7 941 - - Nov 7.9 12.9 954 - - Dec 8.5 10.1 944 - -

$/ton figures are calculated from customs data and may not reflect market prices

42.3 168.1 (29.2) 297.0

Jan-Dec% Change

6.3 850 42.4 919 (65.6) 408.2 31.7

Jan-Feb% Change

32.2 8.1(1.2)

TAIWANESE VAM EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

- - - United States 14,300 3,000 947 9,500 Belgium 6,340 1,590 925 1,590 Egypt 365 1,061 951 1,471 Saudi Arabia 644 1,000 914 1,000 UAE 106

167 1,042 304 Bangladesh 48 - - 3,070 Malaysia 4,695

380 1,029 836 Pakistan 1,030 800 912 800 Thailand 400

9,450 919 22,735 China 3,938 30 1,241 1,122 Others 345

42,428 32,211 Total 17,478

$/ton figures are calculated from customs data and may not reflect market prices

TAIWANESE VAM IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

160 1,009 510 Singapore 531 458 972 468 Japan 572

978 1,103 Total 618

$/ton figures are calculated from customs data and may not reflect market prices

Page 18: Vam Prices

Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

1� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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Wujing is understood to be planning VAM production with a capacity of 200 ktpa, possibly with ethylene imported from Shanghai Jinshan Petrochemical in the Shanghai chemical industry Park (SciP) via pipeline.

no outcome has been heard on the yankuang cathay (lunan) negotiations to secure technology for a planned VAM project.

Asia

Asian vinyl acetate monomer (VAM) prices have held steady in the last month despite continuing efforts by producers to achieve increases in line with higher feedstock costs.

deals were reported done in mid-to-late May at $1020-1030/ton cfr northeast Asia and $10-20 higher in Southeast Asia.

SOUTH KOREAN VAM IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

400 1,080 400 United States - 1,258 1,036 2,832 Singapore 2,873

396 1,025 696 Japan 388 3,928 3,261 Total 2,054

$/ton figures are calculated from customs data and may not reflect market prices

SOUTH KOREAN VAM EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

700 869 700 Indonesia 1,981 275 869 275 Singapore 700

1,288 850 1,288 Thailand 580 1,000 829 2,601 China 3,617

- - - Japan 2,001 - - 900 Others 601

5,764 9,480 Total 3,263

$/ton figures are calculated from customs data and may not reflect market prices

TAIWANESE VAM IMPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 1.0 0.1 1,096 0.4 1,027 Feb 0.9 1.0 922 0.6 981 Mar 0.4 1.2 914 - - Apr 0.5 0.5 973 - - May 1.3 0.5 964 - - Jun 3.5 0.6 973 - - Jul 0.4 1.2 979 - - Aug 2.3 1.4 970 - - Sep 0.9 1.0 971 - - Oct 0.7 0.7 973 - - Nov 0.8 1.5 996 - - Dec 0.8 0.4 1,054 - -

$/ton figures are calculated from customs data and may not reflect market prices

13.3 10.2 54.4 (23.7)

Jan-Dec% Change

1.8 940 1.0 998 18.5 (40.0) (11.4)

Jan-Feb% Change

1.16.2(8.7)

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1� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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chinese domestic prices have also remained steady, reported at rmb9700-9800/ton ex-tank in east china and rmb9600-9800/ton ex-tank in South china on 25 May.

however, producers have indicated that June offers will be raised significantly, following the force majeure declared on supplies from celanese at clear lake. hikes of $100-150/ton for Asian shipments have been indicated in separate announcements by global players. Asian producers are expecting to raise offers to $1100-1150/ton cfr northeast/Southeast Asia.

dairen is understood to be running its 650,000 tpa capacity at Mailiao, taiwan, at around 50% operating rates, down from close to full capacity a month ago. it is thought to have cut back because of tight acetic acid availability, though it is not the only VAM producer to have reduced operating rates in the last month. dairen sources acetic acid from the 300,000 tpa Formosa BP plant at Mailiao, taiwan, which will shut down for maintenance at end-May.

Asian Acetyls’ 170,000 tpa plant at ulsan, South Korea, reportedly shut in May for a maintenance outage, but full details were not available.

Japan

despite the disruption in VAM supply by celanese due to outage of its acetic acid plant at clear lake, texas, and ensuing price increase announcements, VAM prices in Asia have not vividly reacted to these events so far, although certainly on a firming trend in prices.

VAM prices at the end of May were reported at around $1050/ton cfr throughout Asia. this may imply that VAM is amply available so far in Asia and users do not feel the necessity to procure VAM at a higher prices in the short-term. however, Japanese VAM producers expect that VAM prices in Asia could continue an upward trend as many Asian VAM plants will be shut down for maintenance in Q2 and higher ethylene costs could continue further.

Among the scheduled maintenance outages in Japan include denki Kagaku (60,000 tpa) for two weeks from mid June, and JVP (150,000 tpa) for 10 days starting in early July.

VAM demand in Asia is told to be healthy now because PVoh demand is apparently very good this year and other general outlets of VAM (emulsion, eVA, etc.) are also good.

in the domestic Japanese market, all VAM merchant suppliers have been trying to increase VAM prices by yen 8-10/kg (roughly $66-83/ton). While these price increases seem to be accepted, cost increases are far sharper than producers expected and VAM producers will be forced to try another round of price increases.

JAPANESE VAM IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

- - - Others 999 - 999 Total -

$/ton figures are calculated from customs data and may not reflect market prices

JAPANESE VAM EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

1,927 923 2,966 Indonesia 1,486 504 919 1,305 Malaysia -

1,002 946 1,002 Philippines 473 3,413 794 6,442 Singapore 5,952

894 871 1,308 Thailand 504 3,667 889 11,105 China 6,765

400 924 799 South Korea - 450 904 450 Taiwan 545

25,377 15,725 Total 12,257

$/ton figures are calculated from customs data and may not reflect market prices

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

20 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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As introduced last month, prices of most Japanese petrochemical products are linked to the quarterly domestic naphtha prices. While the Q1 price was yen 48,800/kl, most producers are calculating the Q2 price at around yen 56,000/kl, nearly up 15% on Q1. Moreover, the Q3 price could be even higher by 13-14% on Q2. if the present feedstock situation continues, VAM producers will be surely forced to attempt another round of price increase for Q3.

VAM Production and Shipment (Japan) (1,000 tons)

Jan-Mar 07 % Change Production 172.4 6.9 inventory 25.1 4.6 Shipment PVoh 103.9 2.9 PVAc emulsion 10.3 6.0 eVA 23.0 0.2 other 4.0 138.6 exports 32.7 36.8 total 173.9 8.3

PVOH Production and Shipment (Japan) (1,000 tons)

Jan-Mar 07 % Change Production 59.0 3.0 inventory 36.4 10.3 Shipment Vinylon 12.6 1.6 textile Sizing 1.8 4.2 Paper coating 4.5 0.1 Film 1.8 14.2 Adhesive 7.1 2.6 other 10.6 22.0 export 23.4 26.7 total 61.9 11.6

Consumption and Production

Plant outages around the world are understood to include those in the following table. they are not necessarily confirmed or otherwise by the producers concerned.

Company/Plant Period Length Capacity Lost (days) (000 tons) 2007 dairen, taiwan January 5 9 BP, hull, uK April 7 Millennium, la Porte october 31 34 Wacker, germany october 25 11 2006 denki, chiba May/Jun 20 6 dow, texas city Sep/oct 30 30 Kuraray, okayama Sep/oct 21 8 BP, hull Sep/oct/nov 60 34 celanese, Spain november 30 16 Showa denko, Japan november 4 2 Beijing organic december 30 10

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21 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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ethyl AcetAte

United States

celanese placed its global customers on 50% allocation for esters solvents for 60 days following its force majeure declaration on acetic acid on 14 May from its clear lake, texas, plant. While celanese does not produce ethyl acetate at clear lake, it does produce 60,000 tpa of ethyl acetate at Pampa, texas. As discussed previously, the acetic acid plant at Pampa has been shut since 24 May due to a fire at a utility provider. there was no damage reported to any of the production units at Pampa.

celanese issued a 3 c/lb increase on ethyl acetate and methyl acetate, effective 1 June, for north America, or $66/mt for South and central America. that price increase was issued before any of the production problems occurred. BP also issued a 3 c/lb increase on ethyl acetate for north America ($66/mt for South and central America) effective 1 June. oxea said it will raise its n-butyl acetate, iso-butyl acetate, and n-propyl acetate prices, effective 1 June, by 3 c/lb in north America and $66/mt in South and central America. eastman previously issued similar price increases for butyl acetate and propyl acetate effective 15 May.

the outcome of those price increases, as well as the 3 c/lb increase announced for 1 April, has not been determined. in the last newsletter 1 May, market participants reported that the increase had largely been unsuccessful. however, with possible supply constraints looming, the earlier price hike might earn some re-examination.

it is likely that consumers will resist accepting the most recent increases, especially contract customers, since the increases were proposed in the middle of the quarter. But, considering the uncertainty surrounding the restart of celanese’s units, ester solvent producers likely will continue the push for higher prices into July if they are not successful in June.

But, the other key factor is demand. With weaker than expected economic growth during Q1 and a slump in housing continuing in certain parts of the country, solvent demand is sagging, market participants said.

UNITED STATES ETHYL ACETATE EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

551 1,133 1,148 Canada 1,569 93 1,034 590 Mexico 1,988

157 983 157 Chile 318 214 1,130 214 Venezuela 367

1,119 1,147 1,183 Belgium 1,741 1,005 1,011 1,731 Spain 1,420

- - 61 Turkey 1,049 111 1,937 1,088 Others 2,117

6,172 10,569 Total 3,250

$/ton figures are calculated from customs data and may not reflect market prices

UNITED STATES ETHYL ACETATE IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

- - - Mexico 1,993 220 841 220 Argentina 300

1 - 1,002 United Kingdom 310 797 863 797 South Africa 190

- - 17 Others 245 2,036 3,038 Total 1,018

$/ton figures are calculated from customs data and may not reflect market prices

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

22 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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West Europe

BP declared force majeure on ethyl acetate from hull, uK, on 1 May due to production problems which began in April. the 250,000 tpa plant was restarted 12 May, and a BP spokesman said it hoped production would stabilize enough by the end of May to allow the lifting of any remaining allocations.

this latest problem at the hull plant, when combined with operations problems suffered by other european producers earlier this year, meant that supplies were generally considered tight across the region in May. the euro20/mt price increase issued by at least one supplier for 1 May reportedly passed through, but full confirmation was not received from market participants before publication. Spot prices were heard moving up during the month as well. it was understood that spot prices were seen in a wide range between euro930-990/mt late in the month.

Market participants also were waiting for the restart of the celanese units in the uS, not only because of the direct effect on ethyl acetate but also because of the acetic acid supplies.

China

export offers in late May increased to $870-890/ton fob from ports in east china, and $930/ton fob from ports in South china.

domestic prices have increased at the end of May compared to that of April, responding to the increases of acetic acid prices. Supplies also are tight as there were few cargoes available for sale in Jiangsu and Zhejiang, east china.

in the final week of May, prices were at rmb8400/ton ex-tank in Jiangsu (nantong) and rmb8400-8500/ton ex-tank in Zhejiang (taizhou); prices in South china were at rmb8600-8700/ton ex-tank; market prices in north china were at rmb8400-8500/ton. in contrast, ex-works offers in the final week of April were at rmb8100/ton from Jiangsu Sopo, rmb8200/ton from Shanghai Wujing, rmb8200/ton from Shandong Jinyimeng and rmb8600-8700/ton from Jiangmen handsome chemical.

Jiangsu Sopo confirmed that its 200,000 tpa ethyl acetate plant has been debottlenecked to 250,000 tpa this year. the plant has been operating at 80% since last month. it also indicated that another 200,000 tpa ethyl acetate plant will be on stream at end 2008 or 2009. it is also planning a new 100,000 tpa butyl acetate plant.

Shanghai Wujing produces ethyl acetate at a capacity of 100,000 tpa along its acetic acid production. Wujing has indicated that they will add another 100,000 tpa ethyl acetate plant at the end of 2007 or in early 2008.

CHINESE ETHYL ACETATE EXPORTS

Tons $/Ton Tons TonsMarch 2007 Jan-Mar 07 Jan-Mar 06

254 919 374 Israel - 2,053 765 3,030 UAE -

996 760 996 Indonesia 7 1,014 760 3,393 Philippines 1,700 2,996 760 2,999 Singapore 1,004

- - 1,176 Vietnam - 205 941 391 Hong Kong 445

3,976 788 8,990 South Korea 2,961 3,982 760 6,992 Taiwan 1,003

998 894 3,945 Japan 761 21 1,418 195 Others 128

32,481 8,009 Total 16,495

$/ton figures are calculated from customs data and may not reflect market prices

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23 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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CHINESE ETHYL ACETATE IMPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 3.5 0.7 871 1.3 885 Feb 3.4 1.2 733 0.4 1,015 Mar 1.6 1.1 846 1.4 843 Apr 5.9 0.4 932 - - May 5.2 0.8 831 - - Jun 5.4 0.3 1,009 - - Jul 5.6 0.8 893 - - Aug 6.0 0.5 920 - - Sep 4.5 0.9 829 - - Oct 1.2 0.7 867 - - Nov 2.2 1.7 838 - - Dec 2.0 0.5 815 - -

$/ton figures are calculated from customs data and may not reflect market prices

46.4 9.6 34.2 (79.4)

Jan-Dec% Change

8.4 805 3.0 881 (19.0) (65.0) 2.2

Jan-Mar% Change

3.09.42.5

CHINESE ETHYL ACETATE IMPORTS

Tons $/Ton Tons TonsMarch 2007 Jan-Mar 07 Jan-Mar 06

216 822 590 Kuwait 827 1,076 751 1,533 Taiwan 527

97 1,900 895 Others 1,600 3,018 2,954 Total 1,389

$/ton figures are calculated from customs data and may not reflect market prices

CHINESE ETHYL ACETATE EXPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 1.2 1.3 1,091 9.5 787 Feb 0.1 2.1 813 6.5 795 Mar 1.9 4.7 779 16.5 781 Apr 0.6 13.2 787 - - May 3.0 8.1 785 - - Jun 0.4 7.4 778 - - Jul 0.5 9.3 823 - - Aug 1.4 12.4 786 - - Sep 0.9 13.5 786 - - Oct 1.8 13.9 827 - - Nov 0.3 10.1 794 - - Dec 6.9 13.4 788 - -

$/ton figures are calculated from customs data and may not reflect market prices

18.8 109.4 (9.0) 480.4

Jan-Dec% Change

3.1 837 32.5 786 588.1 154.5 305.5

Jan-Mar% Change

8.0(6.1)8.0

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2� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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yaraco’s 80,000 tpa ester solvents plant at chongqing was shut down in early May for a one-month planned maintenance. the solvents plant is at the same site as its acetic acid production, and it is understood that the plant produces more ethyl acetate than butyl acetate.

Jiangmen handsome chemical development ltd., located in Jiangmen city, guangdong Province, will expand its ester solvents capacity to 260,000 tpa during the second half of 2007. Jiangmen handsome

TAIWANESE ETHYL ACETATE EXPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 0.1 1.7 887 1.3 996 Feb 0.2 1.0 931 0.7 986 Mar 0.6 1.2 956 - - Apr 0.4 0.8 956 - - May 0.3 1.2 952 - - Jun 0.6 1.5 944 - - Jul 1.2 1.2 954 - - Aug 0.7 1.0 982 - - Sep 0.5 1.0 975 - - Oct 0.7 1.6 977 - - Nov 0.5 0.8 996 - - Dec 1.5 1.1 1,022 - -

$/ton figures are calculated from customs data and may not reflect market prices

7.5 14.1 146.4 88.3

Jan-Dec% Change

0.3 903 2.1 992 (82.8) 907.9 (24.2)

Jan-Feb% Change

2.79.9(15.5)

TAIWANESE ETHYL ACETATE IMPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

405 898 1,046 Singapore 1,571 1,990 820 4,999 China 1,003

14 2,700 1,414 Japan 1,761 2 3,170 5 Others 293

7,464 4,628 Total 2,411

$/ton figures are calculated from customs data and may not reflect market prices

TAIWANESE ETHYL ACETATE IMPORTS(1,000 Metric Tons)

Month 2005 2006 20062007 2007$/ton$/ton

Jan 2.2 1.8 796 5.1 835 Feb 2.2 2.8 813 2.4 846 Mar 2.1 1.0 860 - - Apr 2.0 2.6 850 - - May 0.8 2.6 842 - - Jun 1.8 2.7 876 - - Jul 2.7 4.7 866 - - Aug 3.0 5.4 858 - - Sep 0.8 4.0 879 - - Oct 3.0 3.5 863 - - Nov 1.3 4.4 862 - - Dec 2.2 2.7 848 - -

$/ton figures are calculated from customs data and may not reflect market prices

24.2 38.1 16.0 57.3

Jan-Dec% Change

4.3 806 7.5 839 117.9 6.5 61.3

Jan-Feb% Change

4.64.1(4.4)

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2� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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currently has two separate acetates production lines with a combined capacity of 210,000 tpa. (ethyl acetate:butyl acetate ratio is 50:50). Jiangmen handsome has been suffering from high feedstock costs during 2007 as all of the acetic acid requirements are imported.

Shandong haihua has been trying to start up a 100,000 tpa ethyl acetate line in Shandong province since January this year. it is understood that there have been some technical issues on catalysts, and the plant is expected to start production in June. commercial product will be available later. the facility is using a process to make ethyl acetate direct from ethanol, provided by davy Process technology.

Shandong Jinyimeng started a new butyl acetate line with a capacity of 80,000 tpa around 20 April, raising its total capacity to 100,000 tpa. however, it shut down the original 20,000 tpa line at the same time. it is planning to expand its current 180,000 tpa of ethyl acetate capacity to 200,000 tpa by July 2007.

Ji’an Shenghua now expects to start its new 100,000 tpa ethyl acetate line in Jilin province in the first half of June this year, later than earlier indication of mid May. the second acetic acid line was brought on stream on 15 May, raising its daily output to 400 tpd. however, the whole acetic acid plant was shut down on 17/18 May due to maintenance and also some environmental issues on one of its ethanol plants. the acetic acid plant is expected to restart in early June.

Asia

higher acetic acid pricing has put further cost pressure on chinese ethyl acetate operations, again encouraging higher export offers from the mainland into regional Asia in the last month.

elsewhere in the region, pricing has also moved up sharply in recent weeks as soaring naphtha prices have increased cost pressure and the celanese clear lake outage and force majeure have tightened supply.

offers were reported at $970-980/ton cfr northeast/Southeast Asia on 25 May, up from $900-910/ton cfr northeast/Southeast Asia in the first-half of May. celanese is understood to have increased its Singapore pricing to $950-960/ton ex-tank in the third week of May.

chinese domestic prices are also stronger, reported at rmb7800-7850/ton ex-tank in east china and rmb8300-8400/ton ex-tank in South china on 25 May, up rmb100-200 on early May levels.

Korea Alcohol is understood to have filed an antidumping complaint in early May against chinese ethyl acetate producers, although it had not been possible to confirm the details at the time of writing. chinese exports into Korea are estimated to have increased to 3000 ton/month in recent months.

Japan

despite the force majeure announcement (50% allocation for two month) by celanese including ethyl acetate, market prices of ethyl acetate in Asia have not reacted vividly according to a major Japanese market player, with an exception of Southern china where there are only a few producers without captive acetic acid.

looking at the domestic Japanese market, all of ethyl acetate producers has been trying to increase the domestic price by a range of yen 8-16/kg (roughly $66-132/ton) on the back of sharply rising costs of

TAIWANESE ETHYL ACETATE EXPORTS

Tons $/Ton Tons TonsFebruary 2007 Jan-Feb 07 Jan-Feb 06

207 977 228 Israel - 122 1,113 304 Tunisia - 182 974 365 India 128 233 937 1,169 Others 2,597

2,066 2,725 Total 744

$/ton figures are calculated from customs data and may not reflect market prices

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

2� Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

Vinyl AcetAte MonoMerunited StatesWest europechinaAsiaJapanconsumption and Production

ethyl AcetAteunited StatesWest europechinaAsiaJapan

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Acetic Anhydrideunited StatesWest europe

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basic feedstocks. Showa denko, the largest ethyl acetate producer in Japan, told tecnon orbichem that it would move to a new price incorporating a yen 8/kg increase from 1 June, but this increase can barely cover the cost increase and would attempt a second increase very shortly.

the domestic consumption of ethyl acetate continues modest growth in Japan in Q1 2007 (see the table below). however, increased imports starting from 2006, especially imports from china, seem to be somewhat affecting domestic producers’ business as ethyl acetate users are facing increasing cost pressure from all raw materials they use and are eager to use cheaper materials, in some cases at the expense of qualities. ethyl acetate from china may be going to be used in other applications than thinner. careful observation is needed on the future trend of imported ethyl acetate.

regarding the anti-dumping case by Korea Alcohol, it is our understanding that not only china but also other countries such as Japan and Singapore will be subjected to the anti-dumping investigations. But, as of 29 May, no Japanese company had received any official letter for the investigation and it remains unclear whether the petition by Korea Alcohol has been accepted officially and any action has been taken by the Korean government.

Japanese Supply Demand Balance of Ethyl Acetate (1,000 Metric Tons)

Q1 04 Q1 05 Q1 06 Q1 07 %Change (07/06) Production 57.4 57.3 57.8 58.5 1.3 inventory change 0.2 0.9 0.7 0.8 *** imports 6.4 5.5 12.2 14.8 22.0 exports 4.7 9.6 6.8 8.7 29.1 consumption 59.3 54.2 63.8 65.4 2.4 export ratio(% 8.2 16.7 11.7 14.9 ***

Japanese Supply of Ethyl Acetate (1,000 Tons)

2004 2005 2006 2007 January 21 21 22 21 February 18 16 21 16 March 19 21 15 21 April 16 22 18 May 10 24 23 June 19 22 21 July 23 25 24 August 18 23 21 September 20 22 17 october 20 22 17 november 22 25 23 december 24 21 22 total 232 264 244 % change 6.0 13.7 7.8 Jan-Mar 58 57 58 59 % change *** 1.4 1.0 1.3

PolyVinyl Alcohol

celanese will close two manufacturing facilities in europe as part of its “revitalisation plans” for its polyvinyl alcohol and emulsions businesses, the company said in late May. the site closures include a PVoh-polyvinyl acetate plant at guardo, Spain, and an emulsions plant at Warrington, uK, while one of four reactors at the Meredosia, illinois, emulsions plant will be idled, according to a celanese spokesman. Approximately 150 employees will be affected by the closures, and production will be absorbed by other production facilities, the spokesman said.

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Acetic Acid • Vinyl AcetAte including ethyl AcetAte, AcetAldehde, PolyVinyl Alcohol And Acetic Anhydride

27 Tecnon OrbiChem ISSUE NUMBER 237 / 1ST JUNE 2007

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Acetic Acidunited StateseuropechinaAsiaJapanconsumption and Production

Vinyl AcetAte MonoMerunited StatesWest europechinaAsiaJapanconsumption and Production

ethyl AcetAteunited StatesWest europechinaAsiaJapan

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the closures are part of an overall strategy laid out by celanese during its december 2006 investor day presentation, during which the company said it wanted to increase eBitdA by $300-$350 million by 2010. the polyvinyl alcohol and emulsions business is expected to deliver at least $50 million in eBitdA growth during that period, the spokesman said.

celanese also said 4 May that it will increase the price of all celvol and celvol e Polyvinyl Alcohol grades globally by 7% per dry pound. this price increase will be effective on 1 June, or as contracts allow.

Acetic Anhydride

United States

eastman issued a 3 c/lb price increase for acetic anhydride and derivatives, effective 1 June for both list and off-list prices. the uS market is watching the situation at celanese in clear lake and Pampa very closely as the acetic anhydride market already was expected to be tight for the remainder of 2007.

West Europe

Acetic anhydride market sources said second quarter contract prices settled in a range from a rollover to an increase of euro5/ton compared to Q1, and that supplies remain tightly balanced. Suppliers reported being sold out for the remainder of the quarter.

econoMic neWS

the uS economy grew at it slowest pace in four years during the first quarter 2007, according to the uS department of commerce, which said 31 May that its revised Q1 gdP figure was 0.6%. the gain in gross domestic product compares with an initial estimate of 1.3% pace, down from 2.5% in the final three months of last year.

uS existing home sales fell by 8.4% in March to a seasonally adjusted annual rate of 6.12 million units. the national Association of realtors (nAr) said the decline was expected due to the unusually poor weather in February and the tightening of mortgage loan availability. the nAr reported that existing home sales for the first quarter this year (ave. 6.41 million units) was actually better than the average sales pace achieved in the second half of 2006.

the european commission has announce that its member states have agreed to negotiating mandates and it will begin negotiating free trade agreements with india, South Korea, and the Association of South east Asian nations (ASeAn) in the coming months.

industrial orders for the 13-member eurozone rose 4.7% in February compared to the same month last year. chemical and synthetic fibre orders increased by 8.1% for the month reflecting the continuing healthy economic conditions in europe.

the institute for Supply Management reported that its April index of manufacturing activity increased to 54.7 (from 50.9 in March). Although the increase was a more significant jump that experts had anticipated, most manufacturers registered growing concerns about costs, especially with metals and energy. Manufacturers registered their ninth consecutive month of inventory reductions and supply chains report having their inventory levels in good balance.

the european union industrial producer price index increased 2.4% in March when compared to the same period last year. Prices for chemicals and synthetic fibres increased 2.6% for the same comparison period.

uS productivity growth exceeded expectations in a slowing economy by registering a 1.7% annualised growth rate in the first quarter. the strong pace in productivity, despite poor gdP growth, suggests that companies are staying focused on keeping labour costs in check. unit labour costs rose just 0.6% for the quarter.

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information contained in this report is obtained from sources believed to be reliable, however no responsibility nor liability will be accepted by tecnon orbichem for commercial decisions claimed to have been based on the content of the report.

reproduction of any part of this work by any process whatsoever without written permission of tecnon orbichem is strictly forbidden.

According to the european commission, the economic sentiment index for April matched March’s six-year high of 111 for the eurozone countries. With industrial capacity utilisation for April approaching the record rate set in 1990 and the broad money supply measure, M3, growing at an annual rate of 10.9%, concerns are rising about future inflation risks. however, the inflation rate for April was 1.8%, below the target rate of 2%. nevertheless many economists still expect the european central Bank to raise interest rates during its June meeting.

coMPAny neWS

celanese corporation said 18 May that funds affiliated with the Blackstone group lP no longer owned any shares in the company after Blackstone reported it had sold its remaining 22,106,597 shares of celanese’s Series A common stock. Blackstone reportedly received $784.8 million in proceeds from the offering. celanese did not receive any of the proceeds. Blackstone group originally acquired a majority share in celanese Ag in 2004, took the company private, and then initiated a public offering in 2005.

correction

We regret that an error appeared in the Price Monitor in our newsletter number 236 dated 2 May. our assessment of the 30 April uS acetic acid export price should have been 26.0-27.0 c/lb fob uSg. Also, an error appeared in the Price Monitor in our newsletter number 235 dated 2 April. our assessment of the 30 March uS acetic acid export price should have been 26.0-27.0 c/lb fob uSg. We apologise for the errors.

Tecnon OrbiChem Ltd12 Calico House,

Plantation Wharf, York PlaceLondon SW11 3TN UK

Tel: +�� 20 7�2� 3���Fax: +�� 20 7�7� �307

Email: [email protected]: www.orbichem.com

Editor William BannChina Victor PengSouth & East Asia Mary Heathcote Japan Keiji Wakatsuki