21 June 2012 11:46 [Source: ICIS news]
LONDON (ICIS)--Styron Europe increased productivity during May after launching its new strategy of settling polystyrene (PS) negotiated prices within the first 10 days of the month, the company said on Thursday.
"Following our proposal for an improved pricing process for polystyrene, we have started to implement this and settled PS prices for our EMEA [Europe, Middle East Africa] business early in the month for the month of May and June," the styrenics producer said.
"As one could expect, we already see the benefits of this new process within our organisation and we hope that our customers are also seeing the benefits of enhanced clarity and consistency in PS pricing,” said Paul Moyer, Styron's vice president and general manager for Plastics.
Styron quoted one unnamed key customer who confirmed the benefit reported by the Switzerland-headquartered company.
“A clear advantage we see is to have clarity on the purchasing price earlier in the month and as a result, the lower amount of invoice corrections we have to deal with.”
Not all Styron’s buyers are convinced, however.
“I am not subscribing to this system at present,” said a large PS buyer. “Rigid pricing structures are out of the window. I may settle a price at the beginning of the month that is totally invalid by the end.
“Corrected invoices at the end of the month is the norm in this industry,” he continued.
Another large PS buyer agreed: “We are still negotiating prices at the end of the month,” it said, adding that it was also settling at the end of June.
Some polymer markets are notorious for the practice of retroactive pricing, notably the low density polyethylene (LDPE) market, where prices are settled for the current month on the very last working day of the month.
It is a practice that some producers have attempted to eradicate but which tends to return to the market once any tightness has disappeared.
“A move like this will need more support from the industry, from other suppliers, if it is to work,” said the first buyer.
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