Aromatics '05: Nova Innovene plans shake-up of PS unit

16 November 2005 14:05  [Source: ICIS news]

COLOGNE, Germany (ICIS news)--Nova Innovene, the 50:50 joint venture between Nova Chemicals and Innovene, on Wednesday revealed a four-pronged strategy to turn around its beleagured polystyrene (PS) business.

"The polystyrene industry is still suffering from overcapacity, negative growth, feedstock volatility and poor margins," managing director Martin Pugh, said at the Fourth Aromatics and Derivatives conference.

The company, which was launched on 1 October 2005, was now the market leader in Europe with 720,000 tonne/year of PS and 415,000 tonne/year of expandable polystyrene (EPS) capacity.

Pugh said that Nova Innovene has started taking steps to address some of these issues and a first move was the announcement last month of the closure of its plant in Berre, France. He said continued consolidation was needed throughout the chain and more closures were likely in the industry.

In addition, the company intends to take cost leadership in Europe which Pugh said was necessary for survival. Pugh said that neither BP nor Nova had the size or scale to do this before but the joint venture now makes this possible.

The company was also looking at different pricing models in an attempt to gain some stability in the market but has yet to come up with an effective solution, he said.

Pugh said that the current negative growth for PS may improve slightly as substitution from cheaper polypropylene subsides. "Our expectation is that as propylene and PP prices rise, the impact from substitution will lessen," he said

Nova Innovene is more bullish for its performance products business with the higher grade of EPS for insulation (EPS Silver) and cups likely to be high growth areas.

By: Elaine Burridge
+44 20 8652 3214

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