1014669--3/16/2006--STERLING_CHEMICALS

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{operation, natural, condition}

{cost, regulation, environmental}

{customer, product, revenue}

{product, market, service}

{debt, indebtedness, cash}

{operation, international, foreign}

{gas, price, oil}

{condition, economic, financial}

{regulation, change, law}

{cost, operation, labor}

{stock, price, share}

{competitive, industry, competition}

{tax, income, asset}

{capital, credit, financial}

Our level of indebtedness could adversely affect our ability to react to changes in our business, and we may be limited in our ability to use debt to fund future capital needs. Despite our level of indebtedness, we and our subsidiaries may be able to incur substantially more debt; which may impact our ability to meet our debt service requirements. Natural gas prices have a significant impact on our competitiveness. High natural gas prices can have the effect of closing markets to our products where we are not competitive. Our financial performance may be adversely affected if we are unable to obtain raw materials at reasonable prices or on acceptable terms. Our financial performance may be adversely affected by our inability to secure ocean-going vessels. 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 loss of a long-term contract or a significant customer could adversely affect us. The petrochemicals industry has experienced several years of depressed conditions and many of our styrene customers are in troubled financial condition. Our technology is widely available and could become obsolete. We face risks related to our export sales of products that may negatively affect our business. Our business activities in the People s Republic of China subject us to certain risks. We depend upon the continued operation of our Texas City facility and any significant downtime at our facility would affect our operations. Our operations involve risks that may not be covered by our insurance or may increase our operating costs. Losses as a result of the September 22, 2005 incident may not be fully covered by insurance 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, our operations and our profitability. Our property insurance does not cover acts of terrorism and, in the event of a terrorist attack, we could lose net sales and our facilities. 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. Future problems with labor relations may negatively affect our business. Transactions consummated pursuant to our plan of reorganization could result in the imposition of material tax liabilities. Our securities are thinly traded and control of our equity is concentrated in a few holders.

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1014669--3/16/2006--STERLING_CHEMICALS_INC