ICIS Forecasting Launches Propylene to Polypropylene Monthly Report

Monthly service blends three innovative modeling techniques to deliver industry's most frequent, precise price forecast

SINGAPORE, March 6 /Xinhua-PRNewswire/ -- ICIS, the world's leading information provider for the chemical and oil industries, today announced the launch of the Asia Propylene to Polypropylene monthly report, the eighth product chain included in ICIS forecasting. Since June 2006, ICIS forecasting has launched reports for the Polystyrene, Polyethylene, Polypropylene and Phenol-Acetone markets in the US and the Polyethylene and Para-xylene markets in Asia. The monthly Ethylene to Polyethylene product chain covering the European market will also be launched shortly.

"Due to continuing market volatility, there is a strong demand for price forecasting of the Propylene and Polypropylene product chain in the petrochemical industry," said Allison Farone, ICIS Vice President - Americas. "The ICIS forecasting monthly report offers the industry a radically new, data-driven approach that is as transparent as it is inclusive of all major factors contributing to price movements."

Propylene consumption is dominated by polypropylene, which accounts for 62% of global consumption and is one of the fastest growing derivatives at 5-6%/year. Polypropylene has a wide variety of end uses in the form of injection moulded parts, fibres and filaments, and non-woven materials.

The Asian propylene market saw a stellar year in 2006 when the highest price level hit $1,340/tonne in August, after a low of $755/tonne in June 2005. Such phenomenon went against market expectations, driving up Asia's chemical prices.

Whether this could be seen again in 2007 is a mystery to the olefins market. Moreover, with spot supplies net short in both northeast and southeast regions despite expectations of new capacities towards the second half of 2007, it remains to be seen how propylene prices would be reflect such external factors.

Asian polypropylene prices hit a new 10-year peak of $1,410/tonne CFR China/SE Asia in August 2006 on the back of tight supply due to regional plant turnarounds and bullish sentiment stirred up by record high crude prices. The steep price hikes had caught regional producers, converters and traders by surprise. Many converters and traders were forced to cut imports as they lacked adequate financing resources to cope with the new market reality. It could have been a different situation for the industry if it had been given indications of the price direction ahead of time.

"It was with this understanding in mind that ICIS forecasting decided to launch a monthly report to plug the gap in pricing information," Farone added. "We are excited to launch a service that will help industry players make effective pricing decisions."

Continuing volatility of petrochemical prices during the past 18 months has exposed the weakness in current forecasting methodologies and highlighted the need for a scientific, rather than experiential approach, to forecasting. Scientific models create consistency, precision and eliminate reliance on the judgment of key individuals. ICIS forecasting's three modeling techniques are:

1. ICIS Market Sentiment Index:

A breakthrough in price forecasting, the innovative ICIS Market

Sentiment Index identifies events (e.g., plant closings, product

shortages) previously reported by ICIS that impact the behavior of

market participants (in terms of supply, demand and price). In short,

it establishes the quantitative relationship between a combination of

multiple events and market reaction to those events.

The Market Sentiment Index quantifies the combination of inflationary

and deflationary news stories reported by ICIS and expresses them as a

number. This number is positive in months where more inflationary than

deflationary events have occurred; it is negative where the combination

of events is likely to have a deflationary impact on sentiment.

2. Time Series:

Time series modeling analyses patterns in historic prices and is

particularly useful in short-term forecasts.

3. Multivariate:

Multivariate pricing identifies relationships between prices and other

variables, including consumer and industrial indicators and trade and

price data.

ICIS forecasting's methodology forecasts prices by incorporating the output of the index in the forecasting model of each feedstock product (e.g., Propylene, Polypropylene). The price generated by incorporating the Market Sentiment Index is provided separately in the monthly report.

ICIS forecasting is completely independent from ICIS price reporting and is based on statistical analysis of historical assessments plus textual analysis of news files.

A free sample of ICIS forecasting can be obtained by going to this link: http://www.icis.com/forecasting/registerforecast.aspx?mode=trial&cp=OTC-CHFO-PressRelease-20070227 (Due to the length of the link, please copy and paste into your browser.)

Notes To Editors

ICIS Forecasting ( http://www.icis.com/forecasting ) is part of ICIS, the world's leading information provider for the chemical and oil industry. ICIS operates with a team of more than 170 people in key markets around the world. For more information about ICIS products and services, please visit http://www.icis.com .

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