<PAGE>
================================================================================


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM           TO


                        COMMISSION FILE NUMBER 000-50132

                            STERLING CHEMICALS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


<Table>
<S>                                                                     <C>
                          DELAWARE                                                        76-0502785
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)               (IRS EMPLOYER IDENTIFICATION NO.)

               1200 SMITH STREET, SUITE 1900
                 HOUSTON, TEXAS 77002-4312                                              (713) 650-3700
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                     (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
</Table>



         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X   No
                                               ---     ---

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes      No  X
                                                    ---     ---

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes  X   No
                          ---     ---

         As of October 31, 2003, Sterling Chemicals, Inc. had 2,825,000 shares
of common stock outstanding.


================================================================================



<PAGE>


                 IMPORTANT INFORMATION REGARDING THIS FORM 10-Q

         Unless otherwise indicated, references to "we," "us," "our" and "ours"
in this Form 10-Q refer collectively to Sterling Chemicals, Inc. and its
wholly-owned subsidiaries.

Readers should consider the following information as they review this Form 10-Q:

FORWARD-LOOKING STATEMENTS

         Certain written and oral statements made or incorporated by reference
from time to time by us or our representatives are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All statements other than statements of historical fact are, or may be
deemed to be, forward-looking statements. Forward-looking statements include,
without limitation, any statement that may project, indicate or imply future
results, events, performance or achievements, and may contain or be identified
by the words "expect," "intend," "plan," "predict," "anticipate," "estimate,"
"believe," "should," "could," "may," "might," "will be," "will continue," "will
likely result," "project," "forecast," "budget" and similar expressions.
Statements in this report that contain forward-looking statements include, but
are not limited to, information concerning our possible or assumed future
results of operations and statements about the following subjects:

         o        the cyclicality of the petrochemicals industry;

         o        current and future industry conditions;

         o        the potential effects of market and industry conditions and
                  cyclicality on our business strategy, results of operations or
                  financial position;

         o        the adequacy of our liquidity;

         o        our environmental management programs and safety initiatives;

         o        our market sensitive financial instruments;

         o        future uses of and requirements for financial resources;

         o        future contractual obligations;

         o        business strategy;

         o        growth opportunities;

         o        competitive position;

         o        expected financial position;

         o        future cash flows;

         o        future dividends;

         o        financing plans;

         o        budgets for capital and other expenditures;

         o        plans and objectives of management;

         o        outcomes of legal proceedings;

         o        compliance with applicable laws; and

         o        adequacy of insurance or indemnification.

Such statements are based upon current information and expectations and
inherently are subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those expected or expressed in
forward-looking statements. Such risks and uncertainties include, among others,
the following:

         o        the timing and extent of changes in commodity prices;

         o        petrochemicals industry production capacity and operating
                  rates;

         o        market conditions in the petrochemicals industry, including
                  the supply-demand balance for our products;

         o        competition, including competitive products and pricing
                  pressures;

         o        obsolescence of product lines;

         o        the timing and extent of changes in global economic and
                  business conditions;

         o        increases in raw materials and energy costs, including the
                  cost of natural gas;

         o        our ability to obtain raw materials and energy at acceptable
                  prices, in a timely manner and on acceptable terms;

         o        regulatory initiatives and compliance with governmental
                  regulations;

         o        compliance with environmental laws and regulations;

         o        customer preferences;

         o        the availability of skilled personnel;

         o        our ability to attract or retain high quality employees;



                                      -i-
<PAGE>

         o        operating hazards attendant to the petrochemicals industry;

         o        casualty losses;

         o        changes in foreign, political, social and economic conditions;

         o        risks of war, military operations, other armed hostilities,
                  terrorist acts and embargoes;

         o        changes in technology, which could require significant capital
                  expenditures in order to maintain competitiveness;

         o        effects of litigation;

         o        cost, availability and adequacy of insurance;

         o        adequacy of our sources of liquidity; and

         o        various other matters, many of which are beyond our control.

         The risks included here are not exhaustive. Other sections of this
report and our other filings with the Securities and Exchange Commission,
including, without limitation, our Annual Report on Form 10-K for the fiscal
year ended September 30, 2002 (our "Annual Report"), include additional factors
that could adversely affect our business, results of operations and financial
performance. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Certain Known Events, Trends, Uncertainties and Risk
Factors" contained in our Annual Report. Given these risks and uncertainties,
investors should not place undue reliance on forward-looking statements.
Forward-looking statements included in this report speak only as of the date of
this report and are not guarantees of future performance. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, no assurances can be given that such expectations will prove to have
been correct. Except to the extent required by applicable securities laws, we
expressly disclaim any obligation or undertaking to release publicly any updates
or revisions to any forward-looking statement to reflect any change in our
expectations with regard thereto or any change in events, conditions or
circumstances on which any forward-looking statement is based. All subsequent
written and oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by these cautionary
statements.

SUBSEQUENT EVENTS

         All statements contained in this Form 10-Q, including the
forward-looking statements discussed above, are made as of November 12, 2003,
unless those statements are expressly made as of another date. We disclaim any
responsibility for the correctness of any information contained in this Form
10-Q to the extent such information is affected or impacted by events,
circumstances or developments occurring after November 12, 2003 or by the
passage of time after such date and, except as required by applicable securities
laws, we do not intend to update such information.

DOCUMENT SUMMARIES

         Statements contained in this Form 10-Q describing documents and
agreements are provided in summary form only and such summaries are qualified in
their entirety by reference to the actual documents and agreements filed as
exhibits to our Annual Report, other periodic reports we file with the
Securities and Exchange Commission or this Form 10-Q.

AVAILABLE INFORMATION

         Access to our annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, amendments to those reports, and effective
June 30, 2003, any beneficial ownership reports that have been electronically
filed by our directors, officers and stockholders that own at least 10% of our
capital securities, filed with or furnished to the Securities and Exchange
Commission pursuant to Section 13(a) and 16(a) of the Exchange Act, may be
obtained through our website (http://www.sterlingchemicals.com). Our website
provides a hyperlink to a third-party website where these reports may be viewed
and printed at no cost as soon as reasonably practicable after such materials
have been electronically filed or furnished. The contents of our website are
not, and shall not be deemed to be, incorporated into this report.




                                      -ii-
<PAGE>



                            STERLING CHEMICALS, INC.



                                      INDEX



<Table>
<Caption>
                                                                                                                           PAGE
                                                                                                                           ----
<S>      <C>                                                                                                               <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements..........................................................................................      1

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.........................     15

Item 3.  Quantitative and Qualitative Disclosures about Market Risk....................................................     21

Item 4.  Controls and Procedures.......................................................................................     21


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.............................................................................................     22

Item 6.  Exhibits and Reports on Form 8-K..............................................................................     22
</Table>





<PAGE>
                            STERLING CHEMICALS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)



<Table>
<Caption>
                                                                        REORGANIZED          PREDECESSOR
                                                                          STERLING            STERLING
                                                                    ------------------    ------------------
                                                                    THREE MONTHS ENDED    THREE MONTHS ENDED
                                                                    SEPTEMBER 30, 2003    SEPTEMBER 30, 2002
                                                                    ------------------    ------------------
<S>                                                                 <C>                   <C>
Revenues ........................................................     $       160,110      $       117,762
Cost of goods sold ..............................................             153,050              100,619
                                                                      ---------------      ---------------
Gross profit ....................................................               7,060               17,143

Selling, general and administrative expenses ....................               3,373                4,893
Other expense (income) ..........................................                   1               (1,925)
Reorganization items ............................................                  --                4,111
Interest and debt related expenses, net of interest
income (1) ......................................................               2,225               16,173
                                                                      ---------------      ---------------
Income (loss) from continuing operations before income taxes.....               1,461               (6,109)
Benefit for income taxes ........................................                 (74)                 (10)
                                                                      ---------------      ---------------
Income (loss) from continuing operations ........................               1,535               (6,099)
Loss from discontinued operations, net of tax expense ...........                  --               (6,781)
                                                                      ---------------      ---------------
Net income (loss) ...............................................     $         1,535      $       (12,880)

Preferred stock dividends .......................................               1,305                   --
                                                                      ---------------      ---------------

Net income (loss) attributable to common stockholders ...........     $           230      $       (12,880)
                                                                      ===============      ===============

Net income per share attributable to common stockholders, basic
and diluted:.....................................................     $          0.08        $          --
                                                                      ===============      ===============

Weighted average shares of common stock outstanding:
   Basic ........................................................               2,825                   --
   Diluted ......................................................               5,161                   --
</Table>


(1)      Contractual interest for the three-month period ended September 30,
         2002 totaled $29,506.


         The accompanying notes are an integral part of the condensed
consolidated financial statements.


                                       1
<PAGE>


                            STERLING CHEMICALS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)



<Table>
<Caption>
                                                                        REORGANIZED           PREDECESSOR
                                                                          STERLING             STERLING
                                                                     ------------------   ------------------
                                                                     NINE MONTHS ENDED    NINE MONTHS ENDED
                                                                     SEPTEMBER 30, 2003   SEPTEMBER 30, 2002
                                                                     ------------------   ------------------
<S>                                                                  <C>                  <C>
Revenues ........................................................     $       403,088      $       316,220
Cost of goods sold ..............................................             407,452              284,340
                                                                      ---------------      ---------------
Gross profit (loss) .............................................              (4,364)              31,880

Selling, general and administrative expenses ....................              11,966               10,631
Other income ....................................................              (3,520)              (1,925)
Reorganization items ............................................                  --               13,389
Interest and debt related expenses, net of interest
income (1) ......................................................               6,069               38,677
                                                                      ---------------      ---------------
Loss from continuing operations before income taxes .............             (18,879)             (28,892)
Provision (benefit) for income taxes ............................              (7,099)                  36
                                                                      ---------------      ---------------
Loss from continuing operations .................................             (11,780)             (28,928)
Income (loss) from discontinued operations, net of tax
expense .........................................................                (976)               7,629
                                                                      ---------------      ---------------
Net loss ........................................................             (12,756)             (21,299)
Preferred stock dividends .......................................               3,767                   --
                                                                      ---------------      ---------------

Net loss attributable to common stockholders ....................     $       (16,523)     $       (21,299)
                                                                      ===============      ===============

Net loss per share attributable to common stockholders, basic
and diluted: ....................................................     $         (5.85)     $            --
                                                                      ===============      ===============

Weighted average shares of common stock outstanding:
   Basic and diluted ............................................               2,825                   --
</Table>


(1)      Contractual interest for the nine-month period ended September 30, 2002
         totaled $75,617.


         The accompanying notes are an integral part of the condensed
consolidated financial statements.





                                       2
<PAGE>


                            STERLING CHEMICALS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (AMOUNTS IN THOUSANDS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                                                                                   PREDECESSOR
                                                                               REORGANIZED STERLING                  STERLING
                                                                     ----------------------------------------    ------------------
                                                                     SEPTEMBER 30, 2003     DECEMBER 31, 2002    SEPTEMBER 30, 2002
                                                                     ------------------     -----------------    ------------------
<S>                                                                  <C>                    <C>                  <C>
ASSETS
Current assets:
   Cash and cash equivalents ....................................     $         38,356      $         99,818      $          9,843
   Accounts receivable, net .....................................               84,076                41,814                70,586
   Inventories ..................................................               50,815                31,011                32,836
   Prepaid expenses .............................................                3,918                 4,561                 3,678
   Deferred tax asset ...........................................               12,343                11,988                    --
   Assets held for sale .........................................                   --                    --               214,898
                                                                      ----------------      ----------------      ----------------
     Total current assets .......................................              189,508               189,192               331,841

Property, plant and equipment, net ..............................              275,854               283,378               117,222
Goodwill ........................................................               48,463                48,463                    --
Other assets ....................................................               21,191                22,998                40,585
                                                                      ----------------      ----------------      ----------------
     Total assets ...............................................     $        535,016      $        544,031      $        489,648
                                                                      ================      ================      ================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable .............................................     $         44,523      $         31,214      $         30,591
   Accrued liabilities ..........................................               22,907                26,635                31,720
   Current portion of long-term debt ............................                   --                    --                57,242
   Liabilities related to discontinued operations ...............                   --                    --                91,017
                                                                      ----------------      ----------------      ----------------
   Total current liabilities ....................................               67,430                57,849               210,570

Pre-petition liabilities - subject to compromise ................                   --                    --               507,988
Pre-petition liabilities - not subject to compromise ............                   --                    --               362,836
Long-term debt ..................................................               94,275                94,275                    --
Deferred tax liability ..........................................               52,808                59,597                    --
Deferred credits and other liabilities ..........................               94,077                93,131                19,731
Redeemable preferred stock ......................................               33,937                30,170                    --
Commitments and contingencies (Note 7)
Stockholders' equity (deficiency in assets):
   Common stock, $.01 par value .................................                   28                    28                    --
   Additional paid-in capital ...................................              206,760               210,527              (141,786)
   Accumulated deficit ..........................................              (14,299)               (1,546)             (419,437)
   Accumulated other comprehensive income .......................                   --                    --               (50,254)
                                                                      ----------------      ----------------      ----------------
   Total stockholders' equity (deficiency in assets) ............              192,489               209,009              (611,477)
                                                                      ----------------      ----------------      ----------------

Total liabilities and stockholders' equity (deficiency
in assets) ......................................................     $        535,016      $        544,031      $        489,648
                                                                      ================      ================      ================
</Table>


         The accompanying notes are an integral part of the condensed
consolidated financial statements.


                                       3
<PAGE>


                            STERLING CHEMICALS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                                                  REORGANIZED            PREDECESSOR
                                                                                    STERLING              STERLING
                                                                               ------------------    ------------------
                                                                               NINE MONTHS ENDED      NINE MONTHS ENDED
                                                                               SEPTEMBER 30, 2003    SEPTEMBER 30, 2002
                                                                               ------------------    ------------------
<S>                                                                            <C>                   <C>
Cash flows from operating activities:
Net loss from continuing operations .......................................     $        (11,780)     $        (28,928)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
   Depreciation and amortization ..........................................               20,224                17,138
   Interest amortization ..................................................                  281                 2,784
   Deferred tax benefit ...................................................               (7,144)                   --
   Other ..................................................................                   --                 2,447
Change in assets/liabilities:
   Accounts receivable ....................................................              (42,262)              (19,275)
   Inventories ............................................................              (19,804)                 (224)
   Prepaid expenses .......................................................                  643                  (719)
   Other assets ...........................................................                 (537)               (2,356)
   Accounts payable .......................................................               13,310                22,626
   Accrued liabilities ....................................................               (3,728)               (5,739)
   Other liabilities ......................................................                  945                18,245
                                                                                ----------------      ----------------

Net cash provided by (used in) operating activities .......................              (49,852)                5,999
                                                                                ----------------      ----------------

Cash flows used in investing activities:
   Capital expenditures ...................................................              (10,634)               (5,434)

Cash flows from financing activities:
   Net borrowings under DIP Facility ......................................                   --                 5,818

Net increase (decrease) in cash and cash equivalents from continuing
operations ................................................................              (60,486)                6,383
Net increase in cash and cash equivalents from discontinued operations ....                 (976)                2,837
Cash and cash equivalents - beginning of period ...........................               99,818                   623
                                                                                ----------------      ----------------
Cash and cash equivalents - end of period .................................     $         38,356      $          9,843
                                                                                ================      ================

Supplemental disclosures of cash flow information:
   Net interest paid ......................................................     $          3,744      $          4,056
   Cash paid for reorganization items .....................................               13,115                 8,834
</Table>


         The accompanying notes are an integral part of the condensed
consolidated financial statements.


                                       4
<PAGE>


                            STERLING CHEMICALS, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1. BASIS OF PRESENTATION

Overview:

         On July 16, 2001, Sterling Chemicals Holdings, Inc. ("Holdings"),
Sterling Chemicals, Inc. and most of their U.S. subsidiaries (collectively, the
"Debtors") filed voluntary petitions for reorganization under Chapter 11
("Chapter 11") of the United States Bankruptcy Code in the U.S. Bankruptcy Court
for the Southern District of Texas (the "Bankruptcy Court"). A plan of
reorganization (as modified, the "Plan of Reorganization") was filed with the
Bankruptcy Court on May 14, 2002 and was confirmed on November 20, 2002. On
December 19, 2002, the Plan of Reorganization became effective and the Debtors
emerged from bankruptcy pursuant to the terms of the Plan of Reorganization.
During the period from July 16, 2001 through December 19, 2002, the Debtors
operated their respective businesses as debtors-in-possession pursuant to the
United States Bankruptcy Code, and the financial statements covered by this
period have been presented in conformity with the American Institute of
Certified Public Accountants ("AICPA")'s Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7").
In this Form 10-Q, we are referred to as "Predecessor Sterling" for periods on
or before December 19, 2002 and as "Reorganized Sterling" for periods after
December 19, 2002.

         The filing of the Chapter 11 petitions was driven by the Debtors'
inability to meet their funded debt obligations over the long-term, largely
brought about by weak demand for petrochemicals products caused by declines in
general worldwide economic conditions, the relative strength of the U.S. dollar
(which caused their export sales to be at a competitive disadvantage) and higher
raw materials and energy costs. As a result of these conditions, the Debtors
incurred significant operating losses. The reorganization, effected through the
bankruptcy filings, permitted the Debtors to preserve cash and gave them the
opportunity to restructure their debt. As the market for our petrochemicals
products remains highly cyclical, the capital structure of Reorganized Sterling
has been designed with the goal of ensuring that we have sufficient liquidity
during cyclical downturns in the markets for our petrochemicals products,
although we cannot give any assurances that our new capital structure will
provide us with sufficient liquidity over any specific period.

         On December 6, 2002, Holdings was merged with and into Predecessor
Sterling. Under the terms of the merger and the Plan of Reorganization, all
equity interests in Holdings were cancelled upon consummation of the merger and
we issued 65,000 shares of Reorganized Sterling common stock to the holders of
Holdings' 13 1/2% Senior Secured Discount Notes in full payment of their claims.
Upon the effectiveness of the Plan of Reorganization, Resurgence Asset
Management, L.L.C., on behalf of itself and certain of its and its affiliates'
managed funds and accounts (collectively, the "Investor"), paid $30 million for
certain shares of Reorganized Sterling's Series A Convertible Preferred Stock.
An additional $30 million was contributed to Reorganized Sterling at the
effectiveness of the Plan of Reorganization in exchange for 2,175,000 shares of
Reorganized Sterling's common stock pursuant to a rights offering made available
to the Debtors' unsecured creditors (other than unsecured creditors of
Holdings), which offering was underwritten by the Investor. In addition, upon
the effectiveness of the Plan of Reorganization, the unsecured creditors of the
Debtors (other than unsecured creditors of Holdings), which included holders of
Predecessor Sterling's 11 1/4% Senior Subordinated Notes and 11 3/4% Senior
Subordinated Notes, received pro rata shares of 11.7% of Reorganized Sterling's
common stock (on a fully diluted basis assuming the conversion of all shares of
Reorganized Sterling's Series A Convertible Preferred Stock into shares of
Reorganized Sterling's common stock) and warrants to acquire 949,367 shares of
Reorganized Sterling's common stock at an exercise price of $52 per share
(subject to adjustment).

         Pursuant to the Plan of Reorganization, on December 19, 2002, the
Debtors' pulp chemicals business was sold to Superior Propane, Inc. ("Superior
Propane") for approximately $373 million and the Debtors' acrylic fibers
business was sold to local management of that business for nominal
consideration. Approximately $80 million of the net proceeds from the sale of
the Debtors' pulp chemicals business remained with Reorganized Sterling, which
continues to own and operate the Debtors' core petrochemicals business. The
remaining net proceeds from the sale were paid to the holders of Predecessor
Sterling's 12 3/8% Senior Secured Notes (the "12 3/8% Notes"), who also received
approximately $94.3 million in principal amount of new 10% Senior Secured Notes
due 2007 issued by Reorganized Sterling (the "New Notes") in satisfaction of
their claims. In addition, on December 19, 2002, Reorganized Sterling
established a new revolving credit facility providing up to $100 million in
revolving credit loans (subject to borrowing base limitations) with The CIT
Group/Business Credit, Inc., as administrative agent and a lender, and certain
other lenders (the "New Revolver"). As of September 30, 2003, we had not
borrowed any money under the New Revolver, although we had approximately $1.3
million in letters of credit outstanding.



                                       5
<PAGE>

         For financial reporting purposes, the "Effective Date" of the Plan of
Reorganization is considered to have been the close of business on December 19,
2002. Due to the Debtors' emergence from Chapter 11 and the implementation of
fresh-start accounting (see Note 3), our financial results have been separately
presented under the heading "Predecessor Sterling" for periods on or before
December 19, 2002 and under the heading "Reorganized Sterling" for periods after
December 19, 2002. Our financial statements as of and for the three and
nine-month periods ended September 30, 2003 are not comparable to those of
Predecessor Sterling for the same periods ended September 30, 2002.
Additionally, in December 2002, we changed our fiscal year-end from September 30
to December 31.

Interim Financial Information:

         In our opinion, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments necessary to present fairly our
consolidated financial position and consolidated results of operations and cash
flows for the applicable three and nine-month periods ended September 30, 2003
and September 30, 2002. All such adjustments are of a normal and recurring
nature. The results of operations and cash flows for the periods presented are
not necessarily indicative of the results to be expected for the full year.
Certain amounts reported in the financial statements for the prior periods have
been reclassified to conform with the current financial statement presentation
with no effect on net loss or stockholders' equity (deficiency in assets).

         The accompanying unaudited condensed consolidated financial statements
should be, and are assumed to have been, read in conjunction with the
consolidated financial statements and notes included in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2002 (our "Annual Report"),
and with the transition report on Form 10-Q/A for the three-month period ended
December 31, 2002 (our "Transition Report"). The accompanying condensed
consolidated balance sheet as of September 30, 2002 has been derived from the
audited consolidated balance sheet as of September 30, 2002 included in our
Annual Report, and the accompanying condensed consolidated balance sheet as of
December 31, 2002 has been derived from the consolidated balance sheet as of
December 31, 2002 included in our Transition Report. The accompanying condensed
consolidated financial statements, as of September 30, 2003 and for the three
and nine-month periods ended September 30, 2003 and September 30, 2002, have
been reviewed by Deloitte & Touche LLP, our independent public accountants,
whose report is included herein.

Recent Developments:

         On November 3, 2003, a barge delivering a raw material owned by a third
party capsized near the docks at our Texas City, Texas facilities. The United
States Coast Guard took over responsibility for directing appropriate actions to
safely address the situation. After the initial incident, the barge was secured
to our docks. On November 11, 2003, the barge was righted and is currently being
unloaded. Prior to being righted, the barge precluded access to our main docks,
and we curtailed production of a variety of our products. Once the barge was
righted, the barge was moved to a location at our facilities that permits full
access to the affected docks. Due to the nature of the barge incident and the
control asserted by the Coast Guard, we are unable at this time to determine
whether our main docks will be closed again in connection with this incident.
The barge incident may have a negative impact on our business, financial
position, results of operations and cash flows if we are unable to recover our
losses from the responsible parties, but we do not believe that the effect will
be material. However, if access to our main docks is again restricted for an
extended period, the impact on our business, financial position, results of
operations and cash flows could become material.

         On October 13, 2003, David G. Elkins resigned from our Board of
Directors.

2. STOCK-BASED COMPENSATION PLAN

         In connection with the implementation of the Plan of Reorganization, we
adopted our 2002 Stock Plan. Under our 2002 Stock Plan, officers and key
employees, as designated by our Board of Directors, may be issued stock options,
stock awards, stock appreciation rights or stock units. Our 2002 Stock Plan may
be amended or modified from time to time by our Board of Directors in accordance
with its terms. We have reserved 379,747 shares of our common stock for issuance
under our 2002 Stock Plan (subject to adjustment). On February 11, 2003, we
granted options to purchase 348,500 shares of our common stock under our 2002
Stock Plan at an exercise price of $31.60 per share.

         We account for our stock-based compensation arrangements using the
intrinsic value method in accordance with the provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), and related interpretations. Under APB 25, if the exercise price of
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized. All stock options issued
under our 2002 Stock Plan were granted with exercise prices at estimated fair
value at the time of grant. Therefore, no compensation expense has been
recognized under APB 25.



                                       6
<PAGE>



         The following table illustrates the effect on net loss and earnings per
share assuming that compensation costs for stock options issued under our 2002
Stock Plan had been determined using the estimated market value at the grant
dates amortized on a pro rata basis over the vesting period if calculated
pursuant to Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," for the three and nine-month periods
ended September 30, 2003. There were no options outstanding under our 2002 Stock
Plan prior to February 11, 2003.


<Table>
<Caption>
                                                                                THREE MONTHS ENDED    NINE MONTHS ENDED
                                                                                SEPTEMBER 30, 2003    SEPTEMBER 30, 2003
                                                                                ------------------    ------------------
                                                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                             <C>                   <C>
Net income (loss) attributable to common stockholders, as
reported ...................................................................     $            230      $        (16,523)

Add:  Stock-based employee compensation expense included in
reported net income (loss), net of related tax effects .....................                   --                    --

Deduct:  Total stock-based employee compensation
expense determined under fair value based method for
all awards, net of related tax effects .....................................                  594                 1,484
                                                                                 ----------------      ----------------
Pro forma net loss .........................................................     $           (364)     $        (18,007)
                                                                                 ================      ================

Earnings (loss) per share attributable to common stockholders as reported,
basic and diluted:..........................................................     $           0.08      $          (5.85)

Pro forma loss per share attributable to common stockholders, basic and
diluted: ...................................................................     $          (0.13)     $          (6.37)
</Table>


3. FRESH-START ACCOUNTING

         Upon our emergence from bankruptcy on December 19, 2002, we implemented
fresh-start accounting under the provisions of SOP 90-7 and became a new
reporting entity. Under SOP 90-7, our reorganization value was allocated to our
assets and liabilities, our accumulated deficit was eliminated and new preferred
and common equity was issued pursuant to the Plan of Reorganization. In
connection with our Plan of Reorganization, our financial advisor, Greenhill &
Co., LLC ("Greenhill") prepared a valuation of our business. In preparing its
valuation, Greenhill considered a number of factors, including valuations by
other parties and the application of various valuation methods, including
discounted cash flow analysis, comparable company analysis and precedent
transaction analysis. Based on Greenhill's valuation, the estimated
reorganization value was allocated as follows (dollars in thousands):

<Table>
<S>                                <C>
Long-term debt                     $      94,275
Redeemable preferred stock                30,000
Stockholders'equity                      210,725
                                   -------------
Total                              $     335,000
                                   =============
</Table>

         In connection with the cancellation of certain debt of Holdings and
Predecessor Sterling pursuant to the Plan of Reorganization, on December 19,
2002 we recorded a $457.8 million gain related to the cancellation of that debt.
Also in connection with fresh-start accounting, we changed our method of
accounting for periodic turnaround maintenance for our manufacturing units. We
previously accrued the cost of these turnarounds in advance, but we now expense
all costs for turnarounds as they are incurred. A one-time credit to reverse a
$5.2 million existing accrual for turnaround expenses was recorded as part of
our fresh-start accounting transactions. A reconciliation of the adjustments
recorded in connection with our debt restructuring, the adoption of fresh-start
accounting and the accounting for discontinued operations at December 19, 2002
is presented below:



                                       7
<PAGE>



<Table>
<Caption>
                                                  PREDECESSOR                                                       REORGANIZED
                                                   STERLING       DISCONTINUED   REORGANIZATION     FRESH-START       STERLING
                                              DECEMBER 19, 2002    OPERATIONS      ADJUSTMENTS      ADJUSTMENTS   DECEMBER 19, 2002
                                              -----------------   ------------   --------------     -----------   -----------------
<S>                                           <C>                 <C>            <C>                <C>           <C>
ASSETS                                                                   (dollars in thousands, unaudited)

Current assets:
Cash and cash equivalents ..................   $         5,839   $     358,108    $    (274,120)   $           -   $        89,827
Accounts receivable, net ...................            87,435         (35,771)           2,226                -            53,890
Inventories ................................            44,832         (17,852)              91                -            27,071
Prepaid expenses ...........................             6,658          (1,388)               -               80             5,350
                                               ---------------   -------------    -------------    -------------   ---------------
Deferred tax asset .........................                 -               -                -           11,134            11,134
                                               ---------------   -------------    -------------    -------------   ---------------
Total current assets .......................           144,764         303,097         (271,803)          11,214           187,272

Property, plant and equipment, net .........           253,875        (139,940)               -          170,121           284,056
Goodwill ...................................                 -               -                -           48,463            48,463
Other assets ...............................            45,212          (6,039)          (3,027)         (13,059)           23,087
                                               ---------------   -------------    -------------    -------------   ---------------
Total assets ...............................   $       443,851   $     157,118    $    (274,830)   $     216,739   $       542,878
                                               ===============   =============    =============    =============   ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...........................   $        45,976   $     (16,684)   $         343    $        (719)  $        28,916
Accrued liabilities ........................            31,860          (7,240)             791           (1,044)           24,367
Current portion of long-term debt ..........            52,327         (10,127)         (42,200)               -                 -
                                               ---------------   -------------    -------------    -------------   ---------------
Total current liabilities ..................           130,163         (34,051)         (41,066)          (1,763)           53,283

Pre-petition liabilities subject
to compromise ..............................           512,760          (2,159)        (510,601)               -                 -
Pre-petition liabilities not subject to
compromise .................................           372,326               -         (372,326)               -                 -
Long-term debt .............................                 -               -           94,275                -            94,275
Deferred tax liability .....................            13,835         (13,835)               -           59,597            59,597
Deferred credits and other liabilities .....            39,189         (15,011)          45,970           24,850            94,998
Commitments and contingencies
Redeemable preferred stock .................                 -               -           30,000                -            30,000
Stockholders' equity (deficiency in assets):
Common stock, $.01 par value ...............                 -               -                -               28                28
Additional paid-in capital .................          (141,786)              -           30,000          322,483           210,697
Retained earnings (accumulated deficit) ....          (434,465)        188,891          448,918         (203,344)                -
Accumulated other comprehensive income .....           (48,171)         33,283                -           14,888                 -
                                               ---------------   -------------    -------------    -------------   ---------------
Total stockholders' equity (deficiency in
assets) ....................................          (624,422)        222,174          478,918          134,055           210,725
                                               ---------------   -------------    -------------    -------------   ---------------
Total liabilities and stockholders' equity
(deficiency in assets) .....................   $       443,851   $     157,118    $    (274,830)   $     216,739   $       542,878
                                               ===============   =============    =============    =============   ===============
</Table>

Reorganization adjustments reflect the forgiveness of debt, including related
accrued interest and certain pre-petition liabilities, in consideration for new
debt and new common stock, resulting in a gain from debt restructuring of $457.8
million, partially offset by an expense of approximately $8.9 million for
professional fees incurred in connection with the reorganization. Fresh-start
adjustments primarily reflect the recording of property, plant and equipment at
fair market value, the recording of a net deferred tax liability arising out of
the difference between the book and tax basis of certain assets and liabilities
(along with the resulting amount of goodwill recorded) and the recognition of
previously unrecognized pension and other post-employment benefits liabilities.


4. DISPOSAL OF LONG LIVED ASSETS

     Pursuant to the Plan of Reorganization, on December 19, 2002, the Debtors'
pulp chemicals business was sold to Superior Propane for approximately $373
million and the Debtors' acrylic fibers business was sold to local management of
that business for nominal consideration. In accordance with SFAS No. 144,
"Accounting for the Impairment and Disposal of Long Lived Assets," we have
reported the operating results of these businesses as discontinued operations in
the consolidated statement of operations and cash flows for Predecessor
Sterling, and the assets and liabilities of these businesses have been presented
separately as assets held for sale and liabilities related to discontinued
operations in Predecessor Sterling's consolidated balance sheet.



                                       8
<PAGE>

         The carrying amounts of the major classes of assets held for sale and
liabilities related to discontinued operations as of September 30, 2002 were as
follows:

<Table>
<Caption>
                                                                            PREDECESSOR STERLING
                                                                             SEPTEMBER 30, 2002
                                                                           (Dollars in Thousands)
                                                   -----------------------------------------------------------------------
                                                   PULP CHEMICALS BUSINESS  ACRYLIC FIBERS BUSINESS           TOTAL
                                                   -----------------------  -----------------------   --------------------
<S>                                                <C>                      <C>                       <C>
ASSETS HELD FOR SALE:
   Current assets .............................     $             59,109     $             11,429     $             70,538
   Property, plant and equipment, net .........                  138,614                       --                  138,614
   Other assets ...............................                    4,890                    1,136                    6,026
                                                    --------------------     --------------------     --------------------
     Total                                          $            202,613     $             12,565     $            215,178
                                                    ====================     ====================     ====================

LIABILITIES RELATED TO DISCONTINUED OPERATIONS:
   Current liabilities ........................                   32,080                    2,385                   34,465
   Deferred credits and other liabilities .....                   42,390                   13,255                   55,645
                                                    --------------------     --------------------     --------------------
     Total                                          $             74,470     $             15,640     $             90,110
                                                    ====================     ====================     ====================
</Table>


         For the three and nine-month periods ended September 30, 2002, the
amount of revenue and net income (loss) (including gains or losses recorded on
the sales) attributable to the discontinued operations were as follows:

<Table>
<Caption>
                                                                                         PREDECESSOR STERLING
                                                                             ---------------------------------------------
                                                                              THREE MONTHS ENDED        NINE MONTHS ENDED
                                                                              SEPTEMBER 30, 2002       SEPTEMBER 30, 2002
                                                                             --------------------     --------------------
                                                                                          (Dollars in Thousands)
<S>                                                                          <C>                      <C>
REVENUES:
   Pulp chemicals business.......................................            $             57,825     $            173,468
   Acrylic fibers business.......................................                           4,782                   14,065
                                                                             --------------------     --------------------
     Total                                                                   $             62,607     $            187,533
                                                                             ====================     ====================

NET INCOME (LOSS):
   Pulp chemicals business.......................................                            (267)                  16,386
   Acrylic fibers business.......................................                          (6,514)                  (8,757)
                                                                             --------------------     --------------------
     Total                                                                   $             (6,781)    $              7,629
                                                                             ====================     ====================
</Table>


5. INVENTORIES

<Table>
<Caption>
                                                                                                          PREDECESSOR
                                                                 REORGANIZED STERLING                       STERLING
                                                    ---------------------------------------------     --------------------
                                                     SEPTEMBER 30, 2003        DECEMBER 31, 2002       SEPTEMBER 30, 2002
                                                    --------------------     --------------------     --------------------
                                                                 (Dollars in Thousands)
<S>                                                 <C>                      <C>                      <C>
Finished products..............................     $             31,445     $             12,228     $             15,470

Raw materials..................................                   14,270                   12,259                    9,656

Inventories under exchange agreements..........                     (655)                     550                    1,682

Stores and supplies............................                    5,755                    5,974                    6,028
                                                    --------------------     --------------------     --------------------
                                                    $             50,815     $             31,011     $             32,836
                                                    ====================     ====================     ====================
</Table>


6. LONG-TERM DEBT

         Pursuant to the Plan of Reorganization, on December 19, 2002, we issued
approximately $94.3 million in principal amount of New Notes to the holders of
Predecessor Sterling's 12 3/8% Notes. The New Notes are senior secured
obligations and rank equally in right of payment with all of our other existing
and future senior indebtedness, and senior in right of payment to all of our
existing and future subordinated indebtedness. The New Notes are guaranteed by
Sterling Chemicals Energy, Inc. ("Sterling



                                       9
<PAGE>

Energy"), one of our wholly owned subsidiaries. Sterling Energy's guaranty ranks
equally in right of payment with all of its existing and future senior
indebtedness, and senior in right of payment to all of its existing and future
subordinated indebtedness. The New Notes are secured by a first priority lien on
our production facilities and related assets.

         The New Notes bear interest at an annual rate of 10%, payable
semi-annually on June 15 and December 15 of each year. Under certain
circumstances, for any interest period ending on or before December 19, 2004, we
may elect to pay interest on the New Notes through the issuance of additional
New Notes rather than the payment of cash. However, if we pay interest through
the issuance of additional New Notes rather than the payment of cash, the
interest rate for the relevant period is increased to 13 3/8%. We made our first
interest payment on the New Notes, in cash, during June 2003. In November 2003,
we made the decision to pay the December 15, 2003 interest payment through the
issuance of additional New Notes. Subject to compliance with the terms of the
New Revolver, we may redeem the New Notes at any time at a redemption price of
100% of the outstanding principal amount thereof plus accrued and unpaid
interest. In addition, in the event of a specified change of control or the sale
of our facility in Texas City, Texas, we are required to offer to repurchase the
New Notes at 101% of the outstanding principal amount thereof plus accrued and
unpaid interest. We are also required to offer to repurchase the New Notes at
100% of the outstanding principal amount thereof plus accrued and unpaid
interest in the event of certain other sales of assets.

         The indenture governing the New Notes contains numerous covenants and
conditions, including, but not limited to, restrictions on our ability to incur
indebtedness, create liens, sell assets, make investments, make capital
expenditures, engage in mergers and acquisitions and pay dividends. The
indenture also includes various circumstances and conditions that would, upon
their occurrence and subject in certain cases to notice and grace periods,
create an event of default thereunder. However, the indenture does not require
us to satisfy any financial ratios or maintenance tests.

         On December 19, 2002, we established the New Revolver with The CIT
Group/Business Credit, Inc., as administrative agent and a lender, and certain
other lenders, which provides up to $100 million in revolving credit loans. The
New Revolver has an initial term ending on September 19, 2007. Under the New
Revolver, Reorganized Sterling and Sterling Energy are co-borrowers and are
jointly and severally liable for any indebtedness thereunder. The New Revolver
is secured by first priority liens on all accounts receivable, inventory and
other specified assets owned by Reorganized Sterling or Sterling Energy, as well
as all of the issued and outstanding capital stock of Sterling Energy.

         Borrowings under the New Revolver bear interest, at our option, at an
annual rate of either the Alternate Base Rate plus 0.75% or the "LIBO Rate" (as
defined in the New Revolver) plus 2.75%. The "Alternate Base Rate" is equal to
the greater of the "Base Rate" as announced from time to time by JPMorgan Chase
Bank in New York, New York or 0.50% per annum above the latest "Federal Funds
Rate" (as defined in the New Revolver). Under the New Revolver, we are also
required to pay an aggregate commitment fee of 0.50% per year (payable monthly)
on any unused portion of the New Revolver. Available credit under the New
Revolver is subject to a monthly borrowing base of 85% of eligible accounts
receivable plus the lesser of $50 million and 65% of eligible inventory. In
addition, the borrowing base for the New Revolver must exceed outstanding
borrowings thereunder by $8 million at all times. As of September 30, 2003,
total credit available under the New Revolver was limited to $67.1 million due
to these borrowing base limitations. As of September 30, 2003, we had not
borrowed any money under the New Revolver, although we had approximately $1.3
million in letters of credit outstanding, leaving unused borrowing capacity
under the New Revolver of approximately $65.8 million.

         The New Revolver contains numerous covenants and conditions, including,
but not limited to, restrictions on our ability to incur indebtedness, create
liens, sell assets, make investments, make capital expenditures, engage in
mergers and acquisitions and pay dividends. The New Revolver also contains a
covenant that requires us to earn a specified amount of earnings before
interest, income taxes, depreciation and amortization on a monthly basis if, for
15 consecutive days, unused availability under the New Revolver plus cash on
hand is less than $20 million. The New Revolver includes various circumstances
and conditions that would, upon their occurrence and subject in certain cases to
notice and grace periods, create an event of default thereunder.

7. COMMITMENTS AND CONTINGENCIES

Product Contracts:

         We have certain long-term agreements that provide for the dedication of
100% of our production of acetic acid, plasticizers, sodium cyanide, disodium
iminodiacetic acid ("DSIDA") and methanol, each to one customer. We also have
various sales and conversion agreements that dedicate significant portions of
our production of styrene and acrylonitrile to certain customers. Some of these
agreements provide for cost recovery plus an agreed profit margin based upon
market prices.

         We are currently litigating in the Bankruptcy Court the assumption of
our contracts with Monsanto Company ("Monsanto") governing the production of
DSIDA and related cure costs. Until this litigation is completed, we cannot
determine whether we will assume these contracts and restart the DSIDA unit or
reject these contracts. In addition, Monsanto has indicated that it may seek to
terminate the DSIDA contracts in the event that we assume the DSIDA contracts.
As a result, we filed a motion with the



                                       10
<PAGE>

Bankruptcy Court seeking to include the issue of whether Monsanto has the right
to terminate the DSIDA contracts following assumption. On March 26, 2003, the
Bankruptcy Court held a hearing on our motion and on May 1, 2003, the Bankruptcy
Court denied our motion on non-justiciability grounds. The rejection or
termination of the DSIDA contracts would have a negative impact on our business,
financial position, results of operations and cash flows compared to those that
would be achieved if we assumed the DSIDA contracts, although we do not expect
that impact to be material.

         On April 24, 2003, BASF Corporation and Sunoco, Inc. announced that
they had signed a letter of intent related to a proposed sale by Sunoco of its
plasticizer operations in Pasadena, Texas to BASF. The proposed transaction is
subject to satisfaction of certain conditions, including regulatory approval.
Since 1986, we have sold all of our plasticizers production to BASF pursuant to
a product sales agreement that expires at the end of 2007. We are currently
evaluating the impact that this acquisition would have on our plasticizers
relationship with BASF and exploring various alternatives that may be available
to us related to our plasticizer operations should the transaction between BASF
and Sunoco ultimately be consummated. Under certain circumstances, the
BASF-Sunoco transaction could have negative effects under our product sales
agreement with BASF. However, we do not believe that any such negative effects
would have a material impact on our business, financial position, results of
operations or cash flows.

         On July 1, 2000, we, in conjunction with BP, entered into a multiyear
contract with Methanex for the purchase of our respective methanol requirements
from Methanex. At that time, we granted Methanex the exclusive right to acquire
the output of our methanol plant, which we continue to own. Under this
agreement, Methanex chose to discontinue production at our methanol plant on
July 1, 2000, and to provide our methanol requirements with methanol produced in
countries that have a significant advantage in the cost of natural gas, the
primary raw material in the production of methanol. The initial term of these
agreements expires December 31, 2003 and Methanex has elected not to renew these
agreements. We are currently analyzing various alternatives for our methanol
plant, however we do not expect this to have a material adverse impact on our
results of operations or financial position.

Environmental Regulations:

         Our operations involve the handling, production, transportation,
treatment and disposal of materials that are classified as hazardous or toxic
waste and that are extensively regulated by environmental, health and safety
laws, regulations and permit requirements. Environmental permits required for
our operations are subject to periodic renewal and can be revoked or modified
for cause or when new or revised environmental requirements are implemented.
Changing and increasingly strict environmental requirements can affect the
manufacturing, handling, processing, distribution and use of our products and
the raw materials used to produce our products and, if so affected, our
business, financial position, results of operations and cash flows may be
materially and adversely affected. In addition, changes in environmental
requirements can cause us to incur substantial costs in upgrading or redesigning
our facility and processes, including our emission producing practices and
equipment and our waste treatment, storage, disposal and other waste handling
practices and equipment.

         We conduct environmental management programs designed to maintain
compliance with applicable environmental requirements. We routinely conduct
inspection and surveillance programs designed to detect and respond to leaks or
spills of regulated hazardous substances and to correct identified regulatory
deficiencies. We continue to participate in Responsible Care(R) initiatives as a
part of our membership in several trade groups, which are partner associations
in the American Chemistry Council. Notwithstanding our efforts and beliefs, a
business risk inherent with chemical operations is the potential for personal
injury and property damage claims from employees, contractors and their
employees and nearby landowners and occupants. While we believe that our
business operations and facility are operated in compliance, in all material
respects, with all applicable environmental, health and safety requirements, we
cannot be sure that past practices or future operations will not result in
material claims or regulatory action, require material environmental
expenditures or result in exposure or injury claims by employees, contractors
and their employees or the public. Some risk of environmental costs and
liabilities is inherent in our operations and products, as it is with other
companies engaged in similar businesses.

         In light of our historical expenditures and expected future results of
operations and sources of liquidity, we believe we will have adequate resources
to conduct our operations in compliance with applicable environmental and health
and safety requirements. Nevertheless, we may be required to make significant
site and operational modifications that are not currently contemplated in order
to comply with changing facility permitting requirements and regulatory
standards. Additionally, we have incurred and may continue to incur liability
for investigation and cleanup of waste or contamination at our own facility or
at facilities operated by third parties where we have disposed of waste. We
continually review all estimates of potential environmental liabilities but can
give no assurances that all potential liabilities arising out of our past or
present operations have been identified or fully assessed or that the amount
necessary to investigate and remediate such conditions will not be significant
to us. It is our policy to make safety, environmental and replacement capital
expenditures a priority in order to assist us in ensuring adequate safety and
compliance at all times.


                                       11
<PAGE>

         On December 13, 2002, the Texas Commission for Environmental Quality
adopted a revised State Implementation Plan (the "SIP") for compliance with the
ozone provisions of the Clean Air Act. The SIP is currently being reviewed by
the Environmental Protection Agency ("EPA"), which is expected to make further
revisions to these rules this fall. Under the current SIP, we would be required
to reduce emissions of nitrogen oxide at our Texas City, Texas facility by
approximately 80%. The current rule also requires monitoring of emissions of
highly reactive volatile organic carbons ("HRVOCs"), such as ethylene and
propylene, by the end of 2004, and imposes a site-wide cap on emissions of
HRVOCs in 2006. However, revisions to the rule are expected in the near future
which would delay the monitoring requirement until the end of 2005. We believe
that we would need to make between $20 million and $30 million in capital
improvements in order to comply with these new regulations. We anticipate that
the majority of these capital expenditures and other expenses would need to be
incurred over a four-year period beginning January 1, 2004.

Legal Proceedings:

         As previously discussed, the Debtors filed voluntary petitions for
reorganization under Chapter 11 on July 16, 2001. As a result of the
commencement of the Chapter 11 cases, an automatic stay was imposed against the
commencement or continuation of legal proceedings against the Debtors outside of
the Bankruptcy Court. Claimants with alleged claims against the Debtors were
required to assert their claims in the Chapter 11 cases by timely filing a proof
of claim, to which the Debtors were allowed to file an objection and seek a
determination from the Bankruptcy Court as to whether such claims were
allowable. Claimants who desired to liquidate their claims in legal proceedings
outside of the Bankruptcy Court were required to obtain relief from the
automatic stay by order of the Bankruptcy Court before doing so. If such relief
was granted, the automatic stay remained in effect with respect to the
collection of liquidated claim amounts. As a general rule, all claims against
the Debtors that sought a recovery from assets of the Debtors' estates have been
addressed in the Chapter 11 cases and have been or will be paid only pursuant to
the terms of the Plan of Reorganization or negotiated settlements.

         A number of issues remain outstanding before the Bankruptcy Court,
including the allowability and classification of certain claims, the amount of
rejection damages payable to some parties whose contracts were rejected in the
bankruptcy proceedings and similar matters. We do not believe that the outcome
of any of these issues will have a material adverse effect on our business,
financial position, results of operations or cash flows, although we cannot give
any assurances to that effect. In addition, as mentioned above, we are currently
litigating in the Bankruptcy Court the assumption of our contracts with Monsanto
governing the production of DSIDA and related cure costs.

         Ethylbenzene Release. A description of this release can be found under
"Legal Proceedings" in Note 9 of the "Notes to Consolidated Financial
Statements" contained in our Annual Report. The two lawsuits listed below and
one intervention currently involve two plaintiffs (excluding the Bobbie Adams,
et al. case, which was settled), and were filed based on this release alleging
personal injury, property damage and nuisance claims:

         o        Zabrina Alexander, et al. v. Sterling Chemicals Holdings,
                  Inc., et al.; Case No. 00-CV0217; In the 10th Judicial
                  District Court of Galveston County, Texas;

         o        Bobbie Adams, et al. v. Sterling Chemicals International,
                  Inc., et al.; Case No. 00-CV0311; In the 212th Judicial
                  District Court of Galveston County, Texas; and

         o        Olivia Ellis v. Sterling Chemicals, Inc.; Case No. JC5000305;
                  In Justice Court No. 5 of Galveston County, Texas.

The Bankruptcy Court, with our support, lifted the automatic stay for all known
claims arising out of the Zabrina Alexander, et al. and Bobbie Adams, et al.
cases, allowing the plaintiffs to proceed against our liability insurance
policies. As a condition to the lifting of the automatic stay, these plaintiffs
waived their right to seek any recoveries against us directly and must look
solely to insurance proceeds to satisfy their claims. On August 18, 2003, the
Bobbie Adams et al. case was settled through mediation, and an order dismissing
the case was entered on September 29, 2003. We have also settled the Olivia
Ellis case but still need to obtain approval of the settlement from the
Bankruptcy Court, which is expected in the near future. Neither of these
settlements will have a material impact on our financial statements. A Motion to
Dismiss has been filed on behalf of the plaintiff in the Zabrina Alexander, et
al. case, which is expected to be approved by the judge in that case in the near
future.

         We believe that all or substantially all of our future out-of-pocket
costs and expenses relating to these lawsuits and the intervention, including
settlement payments and judgments, will be covered by our liability insurance
policies. We do not believe that the claims and litigation arising out of these
lawsuits and the intervention will have a material adverse effect on our
business, financial position, results of operations or cash flows, although we
cannot give any assurances to that effect. To the extent that the lawsuits or
intervention seek a recovery from assets of the Debtors' estates, the claims
have been addressed in the Chapter 11 cases and have been or will be paid only
pursuant to the terms of the Plan of Reorganization or a negotiated settlement.


                                       12
<PAGE>

Other Claims:

         We are subject to various other claims and legal actions that arise in
the ordinary course of our business. Claims and legal actions against the
Debtors that existed as of the Chapter 11 filing date are subject to the
discharge injunction provided for in the Plan of Reorganization, and recoveries
sought thereon from assets of the Debtors are subject to the terms of the Plan
of Reorganization.

8. NEW ACCOUNTING STANDARDS

         In May 2003, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." SFAS No. 149 is intended to result in more consistent
reporting of contracts as either freestanding derivative instruments subject to
SFAS No. 133 in its entirely, or as hybrid instruments with debt host contracts
and embedded derivative features. SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did
not have an impact on our financial statements.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
No. 150 requires certain financial instruments that embody obligations of the
issuer and have characteristics of both liabilities and equity to be classified
as liabilities. SFAS No. 150 is effective for all financial instruments created
or modified after May 31, 2003 and to other instruments at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have an impact on our financial statements.


                                       13

<PAGE>



                         INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Stockholders of Sterling Chemicals, Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of
Sterling Chemicals, Inc. and subsidiaries (the "Company") as of September 30,
2003 (Successor Company balance sheet), and the related condensed consolidated
statements of operations and cash flows for the three and nine-month periods
ended September 30, 2003 (Successor Company operations) and for the three and
nine-month periods ended September 30, 2002 (Predecessor Company operations).
These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

As discussed in Note 1 to the financial statements, on November 20, 2002, the
Bankruptcy Court entered an order confirming the plan of reorganization which
became effective after the close of business on December 19, 2002. Accordingly,
the accompanying financial statements have been prepared in conformity with
AICPA Statement of Position 90-7, "Financial Reporting for Entities in
Reorganization Under the Bankruptcy Code," for the Successor Company as a new
entity with assets, liabilities, and a capital structure having carrying values
not comparable with prior periods as described in Notes 1 and 3.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheets of the
Company as of September 30, 2002 (Predecessor Company balance sheet), and the
related consolidated statements of operations, stockholders' equity (deficiency
in assets), and cash flows for the year then ended (not presented herein)
(Predecessor Company operations); and in our report dated December 13, 2002, we
expressed an unqualified opinion on those consolidated financial statements and
included an explanatory paragraph concerning matters that raise substantial
doubt about the Company's ability to continue as a going concern. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of September 30, 2002 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.

DELOITTE & TOUCHE LLP

Houston, Texas
November 12, 2003


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<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         The following discussion should be read in conjunction with our
condensed consolidated financial statements (including the Notes thereto)
included in Item 1, Part I of this report.

OVERVIEW

         On July 16, 2001, Sterling Chemicals Holdings, Inc. ("Holdings"),
Sterling Chemicals, Inc. and most of their U.S. subsidiaries (collectively, the
"Debtors") filed voluntary petitions for reorganization under Chapter 11
("Chapter 11") of the United States Bankruptcy Code in the U.S. Bankruptcy Court
for the Southern District of Texas (the "Bankruptcy Court"). A plan of
reorganization (as modified, the "Plan of Reorganization") was filed with the
Bankruptcy Court on May 14, 2002 and was confirmed on November 20, 2002. On
December 19, 2002, the Plan of Reorganization became effective and the Debtors
emerged from bankruptcy pursuant to the terms of the Plan of Reorganization.
During the period from July 16, 2001 through December 19, 2002, the Debtors
operated their respective businesses as debtors-in-possession pursuant to the
United States Bankruptcy Code, and the financial statements covered by this
period have been presented in conformity with the American Institute of
Certified Public Accountants ("AICPA")'s Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7").
In this Form 10-Q, we are referred to as "Predecessor Sterling" for periods on
or before December 19, 2002 and as "Reorganized Sterling" for periods after
December 19, 2002.

         The filing of the Chapter 11 petitions was driven by the Debtors'
inability to meet their funded debt obligations over the long-term, largely
brought about by weak demand for petrochemicals products caused by declines in
general worldwide economic conditions, the relative strength of the U.S. dollar
(which caused their export sales to be at a competitive disadvantage) and higher
raw materials and energy costs. As a result of these conditions, the Debtors
incurred significant operating losses. The reorganization, effected through the
bankruptcy filings, permitted the Debtors to preserve cash and gave them the
opportunity to restructure their debt. As the market for our petrochemicals
products remains highly cyclical, the capital structure of Reorganized Sterling
has been designed with the goal of ensuring that we have sufficient liquidity
during cyclical downturns in the markets for our petrochemicals products,
although we cannot give any assurances that our new capital structure will
provide us with sufficient liquidity over any specific period.

         On December 6, 2002, Holdings was merged with and into Predecessor
Sterling. Under the terms of the merger and the Plan of Reorganization, all
equity interests in Holdings were cancelled upon consummation of the merger and
we issued 65,000 shares of Reorganized Sterling common stock to the holders of
Holdings' 13 1/2% Senior Secured Discount Notes in full payment of their claims.
Upon the effectiveness of the Plan of Reorganization, Resurgence Asset
Management, L.L.C., on behalf of itself and certain of its and its affiliates'
managed funds and accounts (collectively, the "Investor"), paid $30 million for
certain shares of Reorganized Sterling's Series A Convertible Preferred Stock.
An additional $30 million was contributed to Reorganized Sterling at the
effectiveness of the Plan of Reorganization in exchange for 2,175,000 shares of
Reorganized Sterling's common stock pursuant to a rights offering made available
to the Debtors' unsecured creditors (other than unsecured creditors of
Holdings), which offering was underwritten by the Investor. In addition, upon
the effectiveness of the Plan of Reorganization, the unsecured creditors of the
Debtors (other than unsecured creditors of Holdings), which included holders of
Predecessor Sterling's 11 1/4% Senior Subordinated Notes and 11 3/4% Senior
Subordinated Notes, received pro rata shares of 11.7% of Reorganized Sterling's
common stock (on a fully diluted basis assuming the conversion of all shares of
Reorganized Sterling's Series A Convertible Preferred Stock into shares of
Reorganized Sterling's common stock) and warrants to acquire 949,367 shares of
Reorganized Sterling's common stock at an exercise price of $52 per share
(subject to adjustment).

         Pursuant to the Plan of Reorganization, on December 19, 2002 the
Debtors' pulp chemicals business was sold to Superior Propane, Inc. ("Superior
Propane") for approximately $373 million and the Debtors' acrylic fibers
business was sold to local management of that business for nominal
consideration. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 144, "Accounting for the Impairment and Disposal of Long Lived
Assets," we have reported the operating results of these businesses as
discontinued operations in the condensed consolidated statements of operations
and cash flows for Predecessor Sterling, and the assets and liabilities of these
businesses have been presented separately as assets held for sale and
liabilities related to discontinued operations in Predecessor Sterling's
condensed consolidated balance sheet. Approximately $80 million of the net
proceeds from the sale of the Debtors' pulp chemicals business remained with
Reorganized Sterling, which continues to own and operate the Debtors' core
petrochemicals business. The remaining net proceeds from the sale were paid to
the holders of Predecessor Sterling's 12 3/8% Senior Secured Notes (the "12 3/8%
Notes"), who also received approximately $94.3 million in principal amount of
new 10% Senior Secured Notes due 2007 issued by Reorganized Sterling (the "New
Notes") in satisfaction of their claims. In addition, on December 19, 2002,
Reorganized Sterling established a new revolving credit facility providing up to
$100 million in revolving credit loans (subject to borrowing base limitations)
with The CIT Group/Business Credit, Inc., as administrative agent and a lender,
and certain other lenders (the "New Revolver"). As of September 30, 2003, we had
not borrowed any money under the New Revolver, although we had approximately
$1.3 million in letters of credit outstanding.


                                       15
<PAGE>
           For financial reporting purposes, the "Effective Date" of the Plan of
Reorganization is considered to have been the close of business on December 19,
2002. Due to the Debtors' emergence from Chapter 11 and the implementation of
fresh-start accounting (see Note 3 to the condensed consolidated financial
statements included in Item 1 of Part 1 of this report), our financial results
have been separately presented under the heading "Predecessor Sterling" for
periods on or before December 19, 2002 and under the heading "Reorganized
Sterling" for periods after December 19, 2002. Our financial statements for the
three and nine-month periods ended September 30, 2003 are not comparable to
those of Predecessor Sterling for the same periods ended September 30, 2002.
Additionally, in December 2002, we changed our fiscal year-end from September 30
to December 31.

RECENT DEVELOPMENTS

         In June 2003, we began the process of restarting the acrylonitrile unit
at our Texas City facility, which had been shut down since February 2001. We
completed the restart of two of the three reactors of the acrylonitrile unit in
July 2003, and completed the restart of the third reactor in August 2003. In
addition, in June 2003, we entered into an expanded acrylonitrile relationship
agreement with BP Chemicals Inc. ("BP"). Our acrylonitrile relationship with BP
is governed by a variety of documents, including a Production Agreement, under
which BP has the right, but not the obligation, to purchase acrylonitrile from
us up to a specified percentage of our annual rated production capacity, and a
Joint Venture Agreement, pursuant to which we and BP formed ANEXCO, LLC, a 50/50
joint venture that markets all of the parties' respective sales of acrylonitrile
everywhere in the world other than the United States, Canada, Mexico, Turkey and
the European Union. Under the Production Agreement, BP furnishes the necessary
raw materials and pays us a conversion fee for any acrylonitrile it elects to
purchase, and reimburses us for a specified portion of our fixed costs related
to acrylonitrile production irrespective of whether BP purchases any
acrylonitrile under the Production Agreement. Under the expanded acrylonitrile
relationship agreement, BP's right to purchase acrylonitrile from us under the
Production Agreement was significantly increased and the Joint Venture Agreement
was modified in a manner that, together with the modifications to the Production
Agreement, is intended to provide us with the ability to operate our
acrylonitrile facility at optimal three-reactor rates throughout the
acrylonitrile market cycles.

         In addition, in July 2003, we entered into a new sodium cyanide supply
agreement with E.I. du Pont de Nemours and Company ("DuPont") which allows us to
enhance the value of hydrogen cyanide produced as a by-product from our
acrylonitrile operations. The sodium cyanide plant, which is located at our
Texas City facility but is owned by DuPont, was restarted in August 2003. The
sodium cyanide plant had been shut down since February 2001.

         On April 24, 2003, BASF Corporation and Sunoco, Inc. ("Sunoco")
announced that they had signed a letter of intent related to a proposed sale by
Sunoco of its plasticizer operations in Pasadena, Texas to BASF. The proposed
transaction is subject to satisfaction of certain conditions, including
regulatory approval. Since 1986, we have sold all of our plasticizers production
to BASF pursuant to a product sales agreement that expires at the end of 2007.
We are currently evaluating the impact that this acquisition would have on our
plasticizers relationship with BASF and exploring various alternatives that may
be available to us related to our plasticizer operations should the transaction
between BASF and Sunoco ultimately be consummated. Under certain circumstances,
the BASF-Sunoco transaction could have negative effects under our product sales
agreement with BASF. However, we do not believe that any such negative effects
would have a material impact on our business, financial position, results of
operations or cash flows.

         On November 3, 2003, a barge delivering a raw material owned by a third
party capsized near the docks at our Texas City, Texas facilities. The United
States Coast Guard took over responsibility for directing appropriate actions to
safely address the situation. After the initial incident, the barge was secured
to our docks. On November 11, 2003, the barge was righted and is currently being
unloaded. Prior to being righted, the barge precluded access to our main docks,
and we curtailed production of a variety of our products. Once the barge was
righted, the barge was moved to a location at our facilities that permits full
access to the affected docks. Due to the nature of the barge incident and the
control asserted by the Coast Guard, we are unable at this time to determine
whether our main docks will be closed again in connection with this incident.
The barge incident may have a negative impact on our business, financial
position, results of operations and cash flows if we are unable to recover our
losses from the responsible parties, but we do not believe that the effect will
be material. However, if access to our main docks is again restricted for an
extended period, the impact on our business, financial position, results of
operations and cash flows could become material.

         On October 13, 2003, David G. Elkins resigned from our Board of
Directors.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2002

Revenues, Cost of Goods Sold and Net Loss

         Our revenues were approximately $160.1 million for the three-month
period ended September 30, 2003, compared to Predecessor Sterling's
approximately $117.8 million in revenues for the three-month period ended
September 30, 2002. This

                                       16
<PAGE>

increase in revenues was primarily due to the restart of our acrylonitrile
facility at the end of the second quarter of 2003 and increased revenues from
our styrene operations. We recorded net income attributable to common
stockholders of approximately $0.2 million for the three-month period ended
September 30, 2003, compared to a net loss attributable to common stockholders
of approximately $12.9 million that Predecessor Sterling recorded for the same
period in 2002. This improvement in net earnings was primarily due to the
exclusion in the quarter ending September 30, 2003 of reorganization items
associated with Predecessor Sterling's bankruptcy proceedings and a reduction in
interest expense due to our significantly lower long-term indebtedness following
our emergence from bankruptcy.

         Revenues from our styrene operations were approximately $110.0 million
for the quarter ended September 30, 2003, or an increase of approximately 18%
from Predecessor Sterling's approximately $93.1 million in revenues from these
operations for the quarter ended September 30, 2002. This increase in revenues
from our styrene operations resulted primarily from increased sales of
ethylbenzene, an intermediate product we produce from ethylene and benzene and
then typically convert into styrene. Our total sales volumes of styrene for the
quarter ended September 30, 2003 decreased approximately 3% from those realized
by Predecessor Sterling during the quarter ended September 30, 2002. Direct
sales prices for styrene during the quarter ended September 30, 2003 remained
consistent with those realized during the quarter ended September 30, 2002.
During the quarter ended September 30, 2003, the prices we paid for benzene and
ethylene, the two primary raw materials required for styrene, both increased
approximately 12% from the prices we paid for these products in the quarter
ended September 30, 2002. The average price we paid for natural gas for the
quarter ended September 30, 2003 increased approximately 54% compared to the
average price we paid for natural gas during the quarter ended September 30,
2002. With the continued rise of raw material and natural gas prices, margins on
our styrene sales for the quarter ended September 30, 2003 decreased from those
realized by Predecessor Sterling during the quarter ended September 30, 2002.

         Our acrylonitrile unit is now operational and we are producing at
planned rates. Revenues from the acrylonitrile unit were $21.2 million in the
third quarter ended September 30, 2003 compared to the $1.5 million in revenues
earned in the quarter ended September 30, 2002 when our unit was shut down.

         Revenues from our other petrochemicals operations, including acetic
acid, plasticizers and methanol, were approximately $28.9 million for the
quarter ended September 30, 2003, an increase of approximately 19% from the
approximately $24.3 million in revenues received by Predecessor Sterling from
these operations during the quarter ended September 30, 2002. This increase in
revenues resulted primarily from higher prices for acetic acid and plasticizers.

Selling, General and Administrative ("SG&A") Expenses

         Our SG&A expenses for the three-month period ended September 30, 2003
were approximately $3.4 million compared to Predecessor Sterling's approximately
$4.9 million in SG&A expenses for the three-month period ended September 30,
2002. This decrease was largely due to our successful cost reduction efforts.

Reorganization Items

         We did not incur any reorganization items during the three-month period
ended September 30, 2003, because we emerged from bankruptcy prior to the
beginning of the year. In the three-month period ended September 30, 2002, we
recorded $4.1 million in reorganization items, which consisted primarily of
professional fees incurred in connection with the Debtors' Chapter 11
proceedings.

Interest Expense

         Our total interest expense of approximately $2.2 million for the
quarter ended September 30, 2003 was substantially lower than the approximately
$16.2 million in interest expense we recorded for the quarter ended September
30, 2002, primarily due to the cancellation of our pre-existing senior secured
debt upon our emergence from bankruptcy.

NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2002

Revenues, Cost of Goods Sold and Net Loss

         Our revenues were approximately $403.1 million for the nine-month
period ended September 30, 2003, compared to Predecessor Sterling's
approximately $316.2 million in revenues during the nine-month period ended
September 30, 2002. This increase in revenues resulted primarily from the
restart of our acrylonitrile facility during 2003 and an increase in styrene
sales prices. We recorded a net loss attributable to common stockholders of
approximately $16.5 million for the nine-month period ended September 30, 2003,
compared to the net loss attributable to common stockholders of approximately
$21.3 million that Predecessor Sterling recorded for the same period in 2002.
This improvement in net earnings was primarily due to the absence of



                                       17
<PAGE>

reorganization items associated with Predecessor Sterling's bankruptcy
proceedings during the nine-month period ending September 30, 2003 and a
reduction in interest expense due to our significantly lower long-term
indebtedness following our emergence from bankruptcy.

         Revenues from our styrene operations were approximately $289.5 million
for the nine-month period ended September 30, 2003, an increase of approximately
23% from Predecessor Sterling's approximately $235.6 million in revenues from
these operations for the same period ended September 30, 2002. This increase in
revenues from our styrene operations was primarily due to higher sales prices
during the first nine months of 2003 compared to those realized during the first
nine months of 2002. Our total sales volumes for styrene during the nine-month
period ended September 30, 2003 decreased approximately 24% from those realized
by Predecessor Sterling during the nine-month period ended September 30, 2002,
primarily due to reduced overall demand in the styrene market. Direct sales
prices for styrene in the nine-month period ended September 30, 2003 increased
approximately 28% compared to those realized during the nine-month period ended
September 30, 2002. During the nine-month period ended September 30, 2003,
prices for benzene and ethylene, the two primary raw materials required for
styrene, also increased approximately 35% and 26%, respectively, from the prices
paid for these products in the nine-month period ended September 30, 2002. The
average price we paid for natural gas for the nine-month period ended September
30, 2003 increased approximately 87% compared to the average price we paid for
natural gas during the nine-month period ended September 30, 2002. Margins on
our styrene sales for the nine-month period ended September 30, 2003 decreased
from those realized by Predecessor Sterling during the nine-month period ended
September 30, 2002, as the higher costs for benzene, ethylene and natural gas
more than offset the increase in direct sales prices.

         Our acrylonitrile unit is now operational and we are producing at
planned rates. Revenues from the acrylonitrile unit were $25.8 million in the
nine months ended September 30, 2003, primarily in the third quarter of 2003,
compared to the $5.1 million in revenues earned during the nine-month period
ended September 30, 2002 when our acrylonitrile unit was shut down.

         Revenues from our other petrochemicals operations, including acetic
acid, plasticizers and methanol, were approximately $87.8 million for the
nine-month period ended September 30, 2003, an increase of approximately 15%
from the approximately $76.5 million in revenues received by Predecessor
Sterling from these operations during the nine-month period ended September 30,
2002. This increase in revenues was primarily due to higher prices for acetic
acid and increased revenues from our methanol relationship with Methanex
Corporation, which expires at the end of 2003.

SG&A Expenses

         Our SG&A expenses for the nine-month period ended September 30, 2003
were approximately $12.0 million, whereas Predecessor Sterling's SG&A expenses
for the nine-month period ended September 30, 2003 were approximately $10.6
million. This increase in SG&A expenses was primarily due to the inclusion in
the current period of bankruptcy related professional fees that were classified
as reorganization items during the nine-month period ended September 30, 2002
pursuant to SOP 90-7, and ongoing matters related to our recent emergence from
bankruptcy, including litigation related to the possible assumption of our DSIDA
contracts with Monsanto, final determinations as to the classification and
allowed amount of disputed claims, final determinations of the amount of
rejection damages assessed for contracts we rejected in our bankruptcy
proceedings and continuing filing obligations with the Bankruptcy Court (see
Note 7 to the consolidated financial statements included in Item 1 of Part 1 of
this report).

Other Income

         Our other income for the nine-month period ended September 30, 2003 was
approximately $3.5 million, consisting of a Texas sales tax refund of
approximately $3.7 million which was offset by other expense of $0.2 million.

Reorganization Items

         We did not incur any reorganization items during the nine-month period
ended September 30, 2003, because we emerged from bankruptcy prior to the
beginning of the year and items previously recorded as reorganization items were
included in SG&A. In the nine-month period ended September 30, 2002, we recorded
$13.4 million in reorganization items, which consisted primarily of professional
fees incurred in connection with the Debtors' Chapter 11 proceedings.

Interest Expense

         Our total interest expense of approximately $6.1 million for the
nine-month period ended September 30, 2003 was substantially lower than the
approximately $38.7 million in interest expense we recorded for the same period
ended September 30, 2002, primarily due to the cancellation of our pre-existing
senior secured debt upon our emergence from bankruptcy.


                                       18
<PAGE>

Provision (Benefit) for Income Taxes

         During the nine-month period ended September 30, 2003, we recorded an
approximate $7.1 million benefit for income taxes compared to a less than $0.1
million provision for income taxes for the nine-month period ended September 30,
2002. In 2003 we recorded a benefit for tax losses versus the full valuation
allowance that was recorded in 2002.

LIQUIDITY AND CAPITAL RESOURCES

         Pursuant to the Plan of Reorganization, on December 19, 2002, we issued
approximately $94.3 million in principal amount of New Notes to the holders of
Predecessor Sterling's 12 3/8% Notes. The New Notes are senior secured
obligations and rank equally in right of payment with all of our other existing
and future senior indebtedness and senior in right of payment to all of our
existing and future subordinated indebtedness. The New Notes are guaranteed by
Sterling Chemicals Energy, Inc. ("Sterling Energy"), one of our wholly owned
subsidiaries. Sterling Energy's guaranty ranks equally in right of payment with
all its existing and future senior indebtedness and senior in right of payment
to all of its existing and future subordinated indebtedness. The New Notes and
Sterling Energy's guaranty are secured by a first priority lien on all of our
production facilities and related assets.

         The New Notes bear interest at an annual rate of 10%, payable
semi-annually on June 15 and December 15 of each year. Under certain
circumstances, for any interest period ending on or before December 19, 2004, we
may elect to pay interest on the New Notes through the issuance of additional
New Notes rather than the payment of cash. However, if we pay interest through
the issuance of additional New Notes rather than the payment of cash, the
interest rate for the relevant period is increased to 13 3/8%. We made our first
interest payment on the New Notes, in cash, during June 2003. In November 2003,
we made the decision to pay the December 15, 2003 interest payment through the
issuance of additional New Notes. Subject to compliance with the terms of the
New Revolver, we may redeem the New Notes at any time at a redemption price of
100% of the outstanding principal amount thereof plus accrued and unpaid
interest. In addition, in the event of a specified change of control or the sale
of our facility in Texas City, Texas, we are required to offer to repurchase the
New Notes at 101% of the outstanding principal amount thereof plus accrued and
unpaid interest. We are also required to offer to repurchase the New Notes at
100% of the outstanding principal amount thereof plus accrued and unpaid
interest in the event of certain other sales of assets.

         The indenture governing the New Notes contains numerous covenants and
conditions, including, but not limited to, restrictions on our ability to incur
indebtedness, create liens, sell assets, make investments, make capital
expenditures, engage in mergers and acquisitions and pay dividends. The
indenture also includes various circumstances and conditions that would, upon
their occurrence and subject in certain cases to notice and grace periods,
create an event of default thereunder. However, the indenture does not require
us to satisfy any financial ratios or maintenance tests.

         On December 19, 2002, we established the New Revolver with The CIT
Group/Business Credit, Inc., as administrative agent and a lender, and certain
other lenders which provides up to $100 million in revolving credit loans. The
New Revolver has an initial term ending on September 19, 2007. Under the New
Revolver, Reorganized Sterling and Sterling Energy are co-borrowers and are
jointly and severally liable for any indebtedness thereunder. The New Revolver
is secured by first priority liens on all accounts receivable, inventory and
other specified assets owned by Reorganized Sterling or Sterling Energy, as well
as all of the issued and outstanding capital stock of Sterling Energy.

         Borrowings under the New Revolver bear interest, at our option, at an
annual rate of either the Alternate Base Rate plus 0.75% or the "LIBO Rate" (as
defined in the New Revolver) plus 2.75%. The "Alternate Base Rate" is equal to
the greater of the "Base Rate" as announced from time to time by JPMorgan Chase
Bank in New York, New York or 0.50% per annum above the latest "Federal Funds
Rate" (as defined in the New Revolver). Under the New Revolver, we are also
required to pay an aggregate commitment fee of 0.50% per year (payable monthly)
on any unused portion of the New Revolver. Available credit under the New
Revolver is subject to a monthly borrowing base of 85% of eligible accounts
receivable plus the lesser of $50 million and 65% of eligible inventory. In
addition, the borrowing base for the New Revolver must exceed outstanding
borrowings thereunder by $8 million at all times. As of September 30, 2003, the
total credit available under the New Revolver was $67.1 million due to borrowing
base limitations. As of September 30, 2003, we had not borrowed any money under
the New Revolver, although we had approximately $1.3 million in letters of
credit outstanding, leaving unused borrowing capacity under the New Revolver of
approximately $65.8 million.

         The New Revolver contains numerous covenants and conditions, including,
but not limited to, restrictions on our ability to incur indebtedness, create
liens, sell assets, make investments, make capital expenditures, engage in
mergers and acquisitions and pay dividends. The New Revolver also contains a
covenant that requires us to earn a specified amount of earnings before
interest, income taxes, depreciation and amortization on a monthly basis if, for
15 consecutive days, unused availability under the New Revolver plus cash on
hand is less than $20 million. The New Revolver includes various circumstances
and conditions that would, upon their occurrence and subject in certain cases to
notice and grace periods, create an event of default thereunder.


                                       19
<PAGE>

         Our liquidity (which includes cash and cash equivalents plus total
credit available under the New Revolver, subject to the conditions to borrowings
under the New Revolver) decreased by $2.1 million to $104.2 million during the
third quarter of 2003. A decrease in cash and cash equivalents during the period
was offset by increases in accounts receivable and inventory due primarily to
the startup of our acrylonitrile unit which accounted for approximately $29.4
million. We believe that our cash on hand, together with credit available under
the New Revolver and other internally generated funds, will be sufficient to
meet our liquidity needs for the reasonably foreseeable future, although we
cannot give any assurances to that effect.

Working Capital

         Our working capital at September 30, 2003 was approximately $122.1
million, a decrease from our working capital of approximately $131.3 million on
December 31, 2002. This decrease in working capital was primarily due to a
reduction in cash and cash equivalents and accrued liabilities, which was
partially offset by increases in accounts receivable, inventories and accounts
payable.

Cash Flow

         Net cash used in our operations was approximately $49.9 million during
the nine-month period ended September 30, 2003, whereas net cash provided by
Predecessor Sterling's operations during the nine-month period ended September
30, 2002 was approximately $6.0 million. This increase in cash used in our
operations was primarily due to an increase in accounts receivable and
inventories, partially offset by an increase in accounts payable. Net cash flow
used in our investing activities, which primarily relates to capital
expenditures, was approximately $10.6 million during the nine-month period ended
September 30, 2003, whereas net cash flow used in Predecessor Sterling's
investing activities during the nine-month period ended September 30, 2002 was
approximately $5.4 million. We did not record any cash from financing activities
during the nine-month period ended September 30, 2003, whereas Predecessor
Sterling recorded net cash from financing activities of approximately $5.8
million during the nine-month period ended September 30, 2002, which related to
borrowings under our debtor-in-possession credit facility during our bankruptcy
proceedings.

Capital Expenditures

         Our capital expenditures were approximately $10.6 million during the
nine-month period ended September 30, 2003, whereas Predecessor Sterling's
capital expenditures during the nine-month period ended September 30, 2002 were
approximately $5.4 million. This increase in capital expenditures in the
nine-month period ended September 30, 2003 was primarily related to capital
projects associated with the restart of our acrylonitrile facility. During the
remainder of 2003, capital expenditures are anticipated to be approximately $5
to $10 million, primarily for routine safety, environmental and equipment
replacement matters.

CRITICAL ACCOUNTING POLICIES, USE OF ESTIMATES AND ASSUMPTIONS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the condensed consolidated
financial statements and related notes. Actual results could differ from those
estimates. On an ongoing basis, management reviews its estimates, including
those related to the allowance for doubtful accounts, recoverability of
long-lived assets, deferred tax asset valuation allowance, litigation,
environmental liabilities, pension and post-retirement benefits and various
other operating allowances and accruals, based on currently available
information. Changes in facts and circumstances may alter such estimates and
affect our results of operations and financial position in future periods.

NEW ACCOUNTING STANDARDS

         In May 2003, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities." SFAS No. 149 is intended to result in more consistent
reporting of contracts as either freestanding derivative instruments subject to
Statement 133 in its entirely, or as hybrid instruments with debt host contracts
and embedded derivative features. SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did
not have an impact on our financial statements.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
No. 150 requires certain financial instruments that embody obligations of the
issuer and have characteristics of both liabilities and equity to be classified
as liabilities. SFAS No. 150 is effective for all financial instruments created
or modified after May 31, 2003 and to other instruments at the beginning of the
first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have an impact on our financial statements.


                                       20
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our financial results can be affected by volatile changes in raw
materials, natural gas and finished product sales prices. Due to the sale of our
pulp chemicals business, which had significant operations in Canada, we are no
longer susceptible to market risk exposure related to those operations in the
form of currency exchange rate movements. Additionally, we do not currently have
exposure to changing U.S. interest rates, as there are no draws outstanding
under our New Revolver; however, the fair value of the New Notes may vary in
response to changing interest rates.

ITEM 4. CONTROLS AND PROCEDURES

         We carried out an evaluation, as of the end of the period covered by
this report, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Exchange Act Rule 13a-15(e)). Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are adequate to ensure that
information we are required to disclose in reports we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.

         In connection with our evaluation, no change was identified in our
internal control over financial reporting that occurred during our most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

                                       21

<PAGE>


                                     PART II
                                OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         The information under "Legal Proceedings" and "Other Claims" in Note 7
to the consolidated financial statements included in Item 1 of Part I of this
report is hereby incorporated by reference.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits: The following exhibits are filed as part of this Form
10-Q:

<Table>
<Caption>

EXHIBIT
NUMBER                              DESCRIPTION OF EXHIBIT
-------                             ----------------------
<S>         <C>   <C>
    2.1     -     Certificate of Ownership and Merger merging Sterling Chemicals
                  Holdings, Inc. into Sterling Chemicals, Inc. (incorporated by
                  reference from Exhibit 2.1 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 2002).

    2.2     -     Joint Plan of Reorganization of Sterling Chemicals Holdings,
                  Inc., et al., dated October 14, 2002 (incorporated by
                  reference from Exhibit 2.1 to the Company's Form 8-K filed on
                  November 26, 2002).

    2.3     -     First Modification to Amendment to Joint Plan of
                  Reorganization of Sterling Chemicals Holdings, Inc., et al.,
                  dated November 18, 2002 (incorporated by reference from
                  Exhibit 2.2 to the Company's Form 8-K filed on November 26,
                  2002).

    3.1     -     Amended and Restated Certificate of Incorporation of Sterling
                  Chemicals, Inc. (incorporated by reference from Exhibit 3.1 to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 2002).

    3.2     -     Certificate of Designations, Preferences, Rights and
                  Limitations of Series A Convertible Preferred Stock of
                  Sterling Chemicals, Inc. (incorporated by reference from
                  Exhibit 4 to the Company's Registration Statement on Form 8-A
                  filed on December 19, 2002).

    3.3     -     Restated Bylaws of Sterling Chemicals, Inc. (incorporated by
                  reference from Exhibit 3.3 to the Company's Quarterly Report
                  on Form 10-Q for the fiscal quarter ended June 30, 2003).

 **15.1     -     Letter of Deloitte & Touche LLP regarding unaudited interim
                  financial information.

 **31.1     -     Rule 13a-14(a) Certification of the Chief Executive Officer

 **31.2     -     Rule 13a-14(a) Certification of the Chief Financial Officer

 **32.1     -     Section 1350 Certification of the Chief Executive Officer

 **32.2     -     Section 1350 Certification of the Chief Financial Officer

 **99.1     -     Amended and Restated Audit Committee Charter
</Table>

** Filed or furnished herewith


                                       22
<PAGE>


         (b) Reports on Form 8-K.

         1.       On July 7, 2003, we filed a Current Report on Form 8-K
                  reporting Items 5 and 7 related to the restart of our
                  acrylonitrile facility in June 2003.




                                       23
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.


                                                STERLING CHEMICALS, INC.
                                                (Registrant)



Date: November 12, 2003                         /s/ RICHARD K. CRUMP
                                                -------------------------------
                                                Richard K. Crump
                                                President and
                                                Chief Executive Officer


Date: November 12, 2003                         /s/ PAUL G. VANDERHOVEN
                                                -------------------------------
                                                Paul G. Vanderhoven
                                                Senior Vice President-Finance
                                                and Chief Financial Officer
                                                (Principal Financial Officer)



                                       24
<PAGE>





                                  EXHIBIT INDEX


<Table>
<Caption>

EXHIBIT
NUMBER                                DESCRIPTION OF EXHIBIT
-------                               ----------------------
<S>        <C>    <C>
   2.1     -      Certificate of Ownership and Merger merging Sterling Chemicals
                  Holdings, Inc. into Sterling Chemicals, Inc. (incorporated by
                  reference from Exhibit 2.1 to the Company's Annual Report on
                  Form 10-K for the fiscal year ended September 30, 2002).

   2.2     -      Joint Plan of Reorganization of Sterling Chemicals Holdings,
                  Inc., et al., dated October 14, 2002 (incorporated by
                  reference from Exhibit 2.1 to the Company's Form 8-K filed on
                  November 26, 2002).

   2.3     -      First Modification to Amendment to Joint Plan of
                  Reorganization of Sterling Chemicals Holdings, Inc., et al.,
                  dated November 18, 2002 (incorporated by reference from
                  Exhibit 2.2 to the Company's Form 8-K filed on November 26,
                  2002).

   3.1     -      Amended and Restated Certificate of Incorporation of Sterling
                  Chemicals, Inc. (incorporated by reference from Exhibit 3.1 to
                  the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 2002).

   3.2     -      Certificate of Designations, Preferences, Rights and
                  Limitations of Series A Convertible Preferred Stock of
                  Sterling Chemicals, Inc. (incorporated by reference from
                  Exhibit 4 to the Company's Registration Statement on Form 8-A
                  filed on December 19, 2002).

   3.3     -      Restated Bylaws of Sterling Chemicals, Inc. (incorporated by
                  reference from Exhibit 3.3 to the Company's Quarterly Report
                  on Form 10-Q for the fiscal quarter ended June 30, 2003).

**15.1     -      Letter of Deloitte & Touche LLP regarding unaudited interim
                  financial information.

**31.1     -      Rule 13a-14(a) Certification of the Chief Executive Officer

**31.2     -      Rule 13a-14(a) Certification of the Chief Financial Officer

**32.1     -      Section 1350 Certification of the Chief Executive Officer

**32.2     -      Section 1350 Certification of the Chief Financial Officer

**99.1     -      Amended and Restated Audit Committee Charter
</Table>

** Filed or furnished herewith