1014669--3/15/2007--STERLING_CHEMICALS

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The indebtedness represented by our Secured Notes, as well as the loans outstanding under our revolving credit facility mature in 2007. We may not be able to refinance this indebtedness or obtain a new revolving capital facility on terms and conditions as favorable to us as those of our existing indebtedness or at all. Any failure to meet our debt obligations could harm our business, financial condition, results of operations or cash flows. Risks Related to Our Business Cyclicality in the styrene markets has in the past and may in the future result in reduced operating margins or operating losses. Certain of our products are sold to only one customer. A large portion of our styrene capacity is sold in the spot markets, rather than pursuant to long-term contracts, which may result in lower profitability during periods of excess domestic or global supply. We may not be able to increase the price of our products to compensate for increases in natural gas prices which may, in turn, decrease the competitiveness of our products in certain markets. We may be unable to obtain raw materials at reasonable prices, on acceptable terms or at all. We may be unable to compete successfully with integrated and larger competitors. Our industry is highly competitive and our results are significantly impacted by manufacturing costs. The worsening of conditions in the styrene industry could cause us to generate losses significant enough to warrant a shut down of our styrene plant. Our ability to realize increases in our acetic acid production capacity made possible through capacity expansions is limited by the current inability to obtain sufficient quantities of carbon monoxide. The styrene industry has experienced several years of depressed conditions and some of our current or potential styrene customers may be in troubled financial condition. Our styrene technology is widely available and could become obsolete. We sell a significant portion of styrene to international customers. Reliance on overseas markets subjects us to significant risks inherent in operating internationally. We depend upon the continued operation of a single site for all of our production. Our operations involve risks that may increase our operating costs, which could reduce our profitability. Our operations are subject to operating hazards and unforeseen interruptions for which we may not be adequately insured. Terrorist attacks, the current military action in Iraq, general instability in various OPEC member nations and other attacks or acts of war in the United States and abroad may adversely affect the markets in which we operate. New regulations concerning the transportation of hazardous chemicals and the security of chemical manufacturing facilities could result in higher operating costs. We are subject to many environmental and safety regulations that may result in significant unanticipated costs or liabilities or cause interruptions in our operations. Approximately 37% of our employees are covered by a collective bargaining agreement that expires on May 1, 2007. Disputes with the union representing these employees or our inability to conclude a favorable renewal of the collective bargaining agreement may negatively affect our business. A failure to retain our key employees could adversely affect our business. Transactions consummated pursuant to our plan of reorganization could result in the imposition of material tax liabilities. We may not successfully implement our acquisition strategy, and acquisitions that we pursue may present unforeseen integration obstacles or costs, increase our leverage or negatively impact our performance.

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1014669--3/15/2007--STERLING_CHEMICALS_INC