26 November 2008 14:50 [Source: ICIS news]
LONDON (ICIS news)--The European petrochemical industry needs to simplify its contracts for spot business and provide better training for traders, a senior trader said on Wednesday.
"A body should be formed to agree a simple short-form contract for spot business," said Peter Demetriadi of traders Tricon, in a paper prepared for the 7th ICIS European Aromatics and Derivatives Conference.
"It is symptomatic of large companies coming into the (trading) business that they are poor on contracts," he added.
There had been a great loss of hands-on experience among those involved in aromatics trading, within both corporations and independent trading houses.
"Some of the smaller (trading) companies just withered away. It may seem as if the heyday for chemical traders has passed," he added.
"One effect is a shortage of people with expertise in the nuts and bolts of the business, people who can manage markets that go down as well as up."
Trading was not a "game of numbers... It is about loading goods on ships, sometimes in difficult circumstances, and delivering them".
Talking about the recent collapse in aromatics prices, he noted two main differences between the current situation and previous major collapses
First, fewer trading companies had been hurt so far, he said, and second more producers and consumers had reduced production.
He drew hope from the fact that the collapse was triggered by a bigger boom, from China, than previously, so could be reversed if China were to renew expansion.
The two-day conference ends on 27 November 2008.
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