Styron looking to adopt new PS pricing approach

qiangzi

Friday, October 19, 2012
% [& N* M1 {2 E4 n$ Q( i$ l
8 e8 u6 D4 C. rBerwyn, PA - Styron announced the company is looking to adopt a new pricing approach following significant shifts in supply and demand in the polystyrene (PS) market. A main contributing factor is the closure of European PS plants, with a projected consequence being 10 percent reduction of active production capacity in Europe. Styron is firmly advocating that now is the opportune time to address the current level of margins almost unsustainable for PS producers; proposing that it is time for the industry to move away from feedstock pricing and towards value pricing. PS is a key strategic business for Styron and an industry it will continue to focus innovation efforts on to help their diversified customer base remain competitive in the different markets they serve, such as packaging, appliances, building and construction. In recent months, PS margins have eroded due to escalating raw material costs. However, this does not deter the commitment of Styron to continue to invest in this market and look for new avenues for industry growth. The closure of Ineos’ PS plant at Marl, Germany, creates the opportunity for Styron, as well as other producers, to introduce a value-based pricing model instead of basing pricing on feedstock. Styron believes that only a sustainable pricing strategy based on value creation will allow PS stakeholders to continue to innovate in the industry. “Our assessment of the current PS market situation is based on many years of experience in the industry. In the past, shutdowns of this scale brought similar changes in the markets and pricing such as in 2008-2009 where a capacity reduction of 350,000 metric tons resulted in a significant change in supply and demand in 2010,” said Paul Moyer, vice president and general manager of Plastics for Styron. “As a key player in this industry, we have analyzed market data and are convinced that the closure of the PS unit at Marl will cause a significant and sustained shift in the marketplace that will bring supply/demand into balance or even tighten the PS market in Europe. Accordingly, we are changing our pricing approach and believe it’s time for the entire industry to change.” -