21 May 2007 21:03 [Source: ICIS news]
LONDON (ICIS news)--The cost savings and margin improvement at the NOVA-Innovene joint venture have put plans to rejuvenate the business more than a year ahead of schedule, managing director Martin Pugh said on Monday.
The cost savings have included a 25% reduction in the number of employees and a rationalisation of its grade range for expandable polystyrene (EPS) and polystyrene (PS) by around 60% since the company was formed in October 2005, he said.
The improved performance has also reflected significant growth in the insulation sector and the upturn in its EPS business since June 2006, Pugh told a press briefing.
“The capacity change has been accepted by the market,” he said. “Recently we have been successful with increases, and also in preventing decreases, much more than in recent years.”
The PS industry was now running at above 90% of capacity utilisation compared with a 79% in 2005, he said.
Pierre Minguet, PS business director of Nova Innovene, said central and eastern Europe were expected to drive growth in PS, while western Europe continues a downturn.
Minguet also forecast strong growth for general purpose PS (GPPS), while high impact PS (HIPS) would decline further. That would lead to a general swing from HIPS toward GPPS in Europe, he said.
Eastern European markets and the growth in extruded polystyrene (XPS), driven by the construction industry, would maintain steady growth for GPPS. However, demand for HIPS would continue to fall, he predicted.
Minguet noted the volatility of the PS market and suggested that the industry may have to introduce a new pricing mechanism.
“We need a more transparent pricing policy, on the back of fundamentals like benzene, supply and demand,” he said.
Nova Innovene would be keeping a close eye on alternatives to PS, in particular polypropylene (PP), he said.
But Minguet noted that PP is not cheap, and propylene is likely to be short in future.
Andy Brice contributed to this article.
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