Petrochem Desk

I had a chance to speak with Christian LeBroc this morning with regard to
curve building for petrochemicals. As it turns out, Christian left RAC in
April and joined the Petrochem Desk as a trader. Previous efforts at
construction of a forward curve by the group have focused on intuition or
SWAGs. Unfortunately, the group had a rough P&L year with at least some of
the blame directed toward the forward curve or lack thereof. When asked
about the fundamentals group, Christian indicated that they'd only been
around about 3-4 months and are not yet well-suited to curve building. John
Nowlan is indeed the head of the group.

From a timing perspective, I told Christian that it would probably take at
least 6-8 weeks to develop a curve, especially considering the need to
understand the key market drivers/fundamentals. As was suggested yesterday
during our meeting, a strong relationship between petrochemicals and a NYMEX
component (e.g., crude oil) would provide a great beginning point--we could
then potentially strengthen/augment this relationship with other key factors
(e.g., supply and demand terms) borne out of our market research.

Nelson