New York (Platts)--24May2007

US polyolefin and PET resin buyers have largely ignored forecasts of
hurricanes this summer opting not to build inventory as a hedge against
possible supply disruptions and resultant rocketing prices, industry sources
said. The hurricane season officially arrives on June 1.

     Earlier in the week, The National Oceanic and Atmospheric
Administration's Climate Prediction Center has forecasted a 75% chance that
the Atlantic hurricane season will be above normal this year and predicted it
could deliver 13 to 17 named storms, of which seven to 10 could develop into
hurricanes. The private weather forecaster WSI had a slightly more modest
forecast and predicted the 2007 Atlantic hurricane season would deliver 15 
named storms, of which eight will become hurricanes. Of those eight, the
company said 4 will develop into intense hurricanes of Category 3 or above. 

     After Hurrricanes Katrina and Rita made landfall in the US Gulf Coast in
late August and September, 2005, respectively, prices of plastic resins
soared due to supply disruptions throughout the region. Domestic linear
low density prices, for example, shot up from the low to mid 50's cents/lb
just before Katrina made landfall in late August to near 80 cents/lb by the
end of December.

     Resin buyers, however, were in no mood to stock up on the mere
possibility of a hurricane driving up prices as current polyolefin values
again in the low to mid-50 cents/lb, and PET values near 70 cents/lb were
deemed too expensive for converters to build inventory. "The cost of resin,
transportation, and storage would be too hard on a company's cash flow
for them to build stock now," a source said. On the contrary, polyethylene
buyers were operating with minimum inventory levels, another source added.

		--Benjamin Morse, benjamin_morse@platts.com