European olefins move to monthly pricing

The blog warmly welcomes the move by players in the European olefins market to re-engage with monthly pricing. The rationale for its support is based upon the conclusion of the major report that International eChem produced 3 years ago, Pricing for Profit:

“The cumulative impact of the current pricing mechanisms has caused the wider marketplace to become increasingly inefficient at balancing supply with demand, particularly over the short term, with an adverse effect on total industry profitability”.

This conclusion has been confirmed, once again, by the disasters that have taken place this quarter. Quarterly price mechanisms are not efficient, and they cause major value-leakage by encouraging consumers to speculate on likely movements in feedstock prices.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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