HIGHLIGHT

Argentina - Country’s economy keeps moving forward. Natural gas crisis seems to be under control. Agriculture sector posted strong growth and highest production in history in latest harvest season. Polyethylene demand is expected to grow by 15.0 percent this year. Local producers estimate domestic demand for PE could reach 525,000 tons in 2004.

BRAZIL - Despite high crude oil prices, feedstock prices in Brazil slipped in July. Crackers are running at capacity in order to produce enough ethylene to meet strong derivative demand. Copesul announced plans to increase ethylene capacity by 56,000 tons per year during maintenance work in 2005. Olefin prices increased and margins improved. Videolar PS unit will be down for at least 60 days, which will tighten PS domestic market. Domestic demand for thermoplastic resins reported to be stronger than expected. Apparent consumption rose 11.8 percent in the first half of the year. Braskem PP capacity starts up in August.

Mexico - Pemex improves production rates at its new VCM new unit at Pajaritos. However, trouble at a heat exchange unit and other plant design problems expected to keep VCM market short in Mexico for most of 2004. Price increases for most resins passed through to end users in July. PVC demand weak in July continues weak. We anticipate another round of price increases in August.

Venezuela - Venezuela to join Mercosur as an Associate Member. Reduced PP production at El Tablazo due to expansion work. Domestic demand continues strong in Venezuela. Ethylene imports continue in Venezuela. Limited ethane supply at El Tablazo has restricted ethylene production and requires imported ethylene to supplement local demand. August 15 is the official date for presidential referendum.  

USA - Second quarter GDP growth shows the economy slowing. A revised first quarter 2004 puts GDP growth at 4.5 percent compared with Q4 2003. Natural gas prices in the US Gulf Coast remained flat in July, currently around US$ 6.0 per MMBtu.