15 November 2006 15:41 [Source: ICIS news]
AMSTERDAM (ICIS news)--Polystyrene (PS) producers should play a bigger role in the settlement of the European styrene (SM) contract price and encourage forward pricing for both products, Nova-Innovene's business director for polystyrene said on Wednesday.
In view of the fact that PS alone constituted 45% of western European styrene demand, and expandable polystyrene (EPS) another 19%, this sector was currently under represented in the various SM monthly contacts, said Pierre Minguet, speaking at the 5th European Aromatics and Derivatives Conference.
"The marginal derivatives set the contract price," said Minguet.
The volatility of styrene prices has been a major problem for producers of PS, he added.
"Some of our customers sell 20% of their PS under a fixed price mechanism – for three months, six months or annual – and they hate volatility. They challenge us to provide them with a fixed PS price or they’ll walk away – to polypropylene, recycled PS, or PET [polyethylene terephthalate]," he said.
"When I say: If I could bring you forward pricing, would you buy more PS? The answer is yes. This is what they are looking for, stability," he added.
"The industry is demanding further developments of forward pricing on PS, hedged by styrene and benzene."
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