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2007-11-04 Manufacturing News
New ethylene based pricing for wire and cable polyethylene grades INEOS Polyolefins introduces a new approach to ethylene based quarterly prices for all wire and cable polyethylene grades.
The move follows similar changes by INEOS Polyolefins in other markets, where prices are now linked to the Quarterly West European Contract Price for Ethylene (WECP C2). Basing prices on ethylene, which is the main raw material of polyethylene, will provide both simplicity and stability, for INEOS’ wire and cable customers. The decision also includes its compounds and resins. “In order for our wire and cable customers to have a sustainable position in their markets, and support necessary investment in research and development, it is important that they have greater stability of prices. Moving to a quarterly based price linked to ethylene achieves this goal and simplifies the process for all parties,” said Andre Scheelen, Sector Manager Construction & Durables, INEOS Polyolefins. “Unlike purely commodity markets, where switching suppliers can be commonplace, contracts in the wire and cable market are typically negotiated for one year or more. In such markets security of supply is paramount to support the necessary technical approvals, which take time to achieve. Quarterly pricing helps support our customers address these needs.” A quarterly approach to pricing will be more stable than monthly and prices linked to ethylene tend to be less volatile, which allows cable manufacturers a greater ability to manage their short term business. Although large ethylene movements can occur under specific market circumstances, these are generally smaller than corresponding polyethylene resin price changes. In addition, it has been recognised that this move provides a means for cable manufacturers to link their final product prices to a neutral and independent reference such as WECP C2. INEOS Polyolefins has started to successfully introduce this new approach
with many of its customers and will be applying ethylene based quarterly
prices for all its resins and compounds for the Wire & Cable market.
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