Q4 2008 Market Commentary

Q4 2008 Market Commentary

Please find attached some comments on where we think the markets will go in Q4 2008. Information is from a variety of sources including suppliers. These are just indications rather than exact predictions and has been very difficult given the Global recession we are all facing.

If you have any comments or we can help with anything else, please let us know.

Methanol:
Methanol Q4 contract price has rolled over from Q3 even though producers wanted a slight increase, however this is unlikely to happen in the near future as buyers want price stability going forward into 2009. Methanex are restarting a plant in New Zealand but will mothball another with overall increase of c. 0.5 million tonnes. They have also embarked on gas exploration in Chile to secure supplies for their 3 plants in Chile. MHTL have declared force majeure due to problems at their M5000 plant which is expected to be down for all of Q4. Methanol is seeing the growth of new sources of demand - dimethyl ether (DME), direct blending of methanol into gasoline, biodiesel and fuel cells.

Acetic Acid:
Supply has returned to normal and Acetic Acid prices have rolled over from Q3 or seen a very minor fall, due to the rollover in Methanol contracts.

Ethanol:
Food versus Fuel, the biofuel debate continues. Prices are expected to remain stable for the balance of 2008. High quality material remains tight and this situation will continue through Q4 especially after the TEREOS synthetic Ethanol closure in 2007.

Ethyl Acetate:
European production is back to normal and the sale of the BP Ethyl Acetate business to INEOS has been completed. Q4 prices are expected to decline increase on the back of raw material rollover and a decrease in demand due to the recession.

Isopropanol
Producers are seeking further increases on the back of  strong demand and lower imports. Prices are expected to remain stable however in Q4.

Acetone
As the recession affects the construction industry, the demand for phenolic resins is expected to decline sharply. Hence producers will cut back Phenol reduction and therefore shift the supply/demand balance of Acetone and consequently the acetone market will remain tight. Consequently prices are expected to rise by approx. 5-8%. EP-grade acetone is said to carry a 10-20% premium over current normal-grade acetone.

Toluene, Hydrocarbons and White Spirits
Volatile Oil and Gasoline markets continue therefore making projections very difficult. As oil prices fall due to lack of demand and lack of money, hydrocarbons are expected to fall quite significantly. The Toluene market is in over supply as less is being put into the gasoline pool and therefore more product is available in the chemical markets.

Mono Ethylene Glycol (MEG)
The MEG market has swung from being tight in Q3 to being well supplied in Q4 as production returns to normal in Saudi Arabia. Stable pricing forecast on the basis of good supply being balanced with strong demand into the antifreeze market.

Glycerine
Glycerine prices are under strong pressure and are on the decline. Availability is still very good. European demand is balanced against production output and exports have decreased to China and US.

THF (Tetra Hydro Furan)
ISP's new plant is due on stream earlier than expected and should start in November. Strong demand will be met by this increased and prices are expected to fall by approx. €100 per tonne. Lyondell have ceased direct production of THF and while they continue to market product, it is believed that they are taking material directly from another producer. Demand into the pharmaceutical area is ever increasing.

Acetonitrile
Acetonitrile is a co-product in the production of Acrylonitrile and needs to be purified to remove high levels Hydrogen Cyanide. This is normally done alongside the Acrylonitrile production unit as crude Acetonitrile is difficult to transport because of the HCN content. Most Acrylonitrile plants actually burn the crude Acetonitrile rather than purify it. Once purified the Acetonitrile output is approximately 2.5-3% of Acrylonitrile output and consequently the Acetonitrile supply/demand balance is totally governed by Acrylonitrile output. There are no commercial first intent producers of Acetonitrile. As demand for Acrylonitrile has plummeted, there is a global shortage of Acetonitrile and this is expected to remain the case well into 2009. The issue will be trying to secure supply rather than price !!!

Other News Items
Brockley Group (Eirchem) is continuing to add to their portfolio of products and principals and we will keep you updated on developments. Some of our most recent additions are:

FUMARIC ACID
TMOF (Tri Methyl Ortho Formate).
VAM (Vinyl Acetate Monomer)

As mentioned in our previous commentary, we have started producing Adblue® under our BlueCat® trademark. Adblue® is required in all new trucks using SCR technology to reduce NOx emissions. We are the only Irish manufacturer of this product. If you want any more information, please contact me.

Brockley Group Ltd also offer a range of automotive products in bulk and packed, including antifreeze, screenwash, traffic film remover and will shortly add brake fluids also.

Our Rathcoole manufacturing facility is undergoing upgrading, particularly with regard to BlueCat® Adblue® manufacturing and packing and the new facilities were officially opened by the Minister of Transport, Mr. Noel Dempsey T.D., in April 2008.

Best Regards
Patrick Short
Brockley Group Limited
Tel +353 1 8392016
www.brockleygroup.com
www.bluecat.ie