Ongoing market discussions covering the cost of ethylene and propylene for Q3 have brought the failings of the existing quarterly pricing mechanism into sharp focus.
As a major buyer, INEOS considers that the quarterly pricing mechanism no longer meets the needs of its derivative businesses. Supply and demand factors are overshadowed by high oil prices and volatility, leading to price changes that do not reflect the underlying market conditions. The current approach, which can lead to huge corrections in the monomer price, is not acceptable to the company's derivative businesses or its customers.
The time is right to move away from the quarterly pricing mechanism. INEOS Buyers propose monthly pricing to help mitigate the impracticalities presented by the current system and will discuss this change with its suppliers, to establish a monthly pricing mechanism effective from 1st October 2008.
(Company Press Release)