PETROCHEM WIRE OLEFINS METHODOLOGY/EXPLANATION

PetroChem Wire publishes via daily email and on its website (www.petrochemwire.com) bids and offers for ethylene and refinery grade propylene as they are understood to be at the close of each trading day. Bid and offer information is published for the three ethylene systems (Equistar, Williams, Choctaw) and RGP (Mont Belvieu delivery) and are separated into front-month and next-month delivery.

PetroChem Wire spot market olefins information is gathered from the market at large. All bids and offers are directly confirmed to be firm and valid by editors employed by PetroChem Wire LLC. In the absence of firm bids and offers, PetroChem Wire publishes a blank. Bid and Offer information is published for the three Ethylene systems (Equistar, Williams, Choctaw) and RGP (Mont Belvieu delivery) and are separated into Front-Month and Next-Month delivery.

PetroChem Wire publishes confirmed “Done Deals” each day on its website. Both sides of deals parties must be reported and confirmed by at least one deal participant. Published deals must also include confirmed volume, delivery month and transmission system. Only deals with an outright price are published by PetroChem Wire. Deals concluded on an index basis are not published by PetroChem Wire. Deal information is published for the three Ethylene systems (Equistar, Williams, Choctaw) and RGP (Mont Belvieu delivery) and are separated into Front-Month and Next-Month delivery.

PetroChem Wire editors do not extrapolate price information in any form and do not publish mark-to-market assessments representing a value that may be academic. All price information published in PetroChem Wire has been verified as being true and is confirmed to have actually occurred.

PetroChem Wire publishes a weighted monthly average price for ethylene and refinery grade propylene on the 1st business day of each month, which is emailed to each subscriber, along with a price summary of the deals used to calculate that average. Weighted average prices are determined by dividing the sum of deal prices by the sum of deal volume for an entire calendar month. Volumes used to calculate the averages are published in aggregate form only. Monthly average prices are published for the three Ethylene systems (Equistar, Williams, Choctaw) and RGP (Mont Belvieu delivery) and are separated into Front-Month and Next-Month delivery.

PetroChem Wire publishes a Mid-month Weighted Average of Olefins deals concluded from the 16th day of the previous month through the 15th day of the current month for the same delivery month, i.e. all February deals concluded from January 16 through February 15.) Volumes used to calculate the averages are published in aggregate form only. Monthly average prices are published for the three Ethylene systems (Equistar, Williams, Choctaw) and RGP.

PetroChem Wire editors must reserve the right to exercise editorial judgment in not including a deal in weighted price averages, and must document why a deal is dismissed, to be able to best respond to possible questions from market participants about its dismissal. Typical reasons include inability to confirm transportation mode, delivery system identity, counterparty identity and deal volume.

DEFINITION OF TERMS

Bid: An offer to buy.

Offer: An offer to sell.

Spot market: Individual transactions of mutually agreed volume, price and delivery that is separate from monthly supply contract agreements.

Outright price: A spot market deal price that is not relative to another price, such as an index, a supply contract or another month. Example of an outright price: 50 cents per pound. Examples of other types of spot market deal pricing: Sell January, buy back March at 1 cent per pound; January PCW weighted average; 2 cents below January contract.

Front-month: When a bid, offer or deal specifies delivery for the same month as the negotiation. Example: On January 2, bids, offers and deals for material to be delivered in January, it is a front-month bid, offer or deal.

Next-month: When a bid, offer or deal specifies delivery for the next month relative to the negotiation. Example: On January 2, bids, offers and deals for material to be delivered in February, it is a next-month bid, offer or deal.

Reported: Information communicated directly to PetroChem Wire editors via telephone, instant messenger or email.

Internally document: Documents that are written by PetroChem Wire editor with respect to an editorial decision and are emailed to Executive Editor for retention. Such documents when created by Executive Editor are emailed for retention backup by Senior Editor.

“Close of each business day”: There is no formal start or close of a “trading session” in the US Olefins market. As such, information is generally gathered from 8 am to 6 pm US Central Time, but may be extended if information is discovered outside of those hours.

Please direct questions to Kathy Hall at 720 480 6288 / kathy@petrochemwire.com or Mark Quiner at 713 331 0464 / mark@petrochemwire.com.