NOVA Innovene to start using forward pricing for PS

18 May 2007 17:16  [Source: ICIS news]

LONDON (ICIS news)--NOVA Innovene is ready to start talking to key polystyrene (PS) customers about using financial instruments such as forward pricing to help smooth out volatility in its polymer prices, Pierre Minguet, PS business manager told ICIS news on Friday.

 

Speaking after a NOVA Innovene/ICIS roundtable discussion in London, he said the company would be looking to use forward pricing offers and, at a later date, future pricing mechanisms.

 

“We are customer-minded, and we want to respond to their needs,” he said. "We have heard that volatility is a concern and want to do something about it.”

 

Volatility in the PS market is being driven by benzene and styrene prices, which themselves have become increasingly volatile.

 

A few players are already hedging or looking to hedge at this level in the product chain, but it is not widespread and certainly not at the polymer level.

 

However, producers and customers are increasingly looking at ways of hedging their pricing risk.

 

NOVA Innovene, Minguet said, had acted since its formation - as a joint venture between Canada’s NOVA Chemical and BP’s Innovene, now part of INEOS - to tackle its own supply/demand balance and to reduce the cost base of its operations, addressing both fixed and variable costs.

 

“The third step is now to offer something to customers on pricing mechanisms," he said.

 

"It is in line with our strategy and we believe we are driving styrenic polymers to a better future – it’s not healthy to have assets running at low rates and not being profitable,” he added.

 

Minguet said NOVA Innovene would work with partners in the banking sector to develop the pricing mechanisms and make its entry into the area of hedging and futures.

 

The full report of the roundtable discussion will appear shortly in ICIS Chemical Business.

By: John Baker
+44 20 8652 3214

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