Europe moves closer to futures market

14 October 1996 00:00  [Source: ICB]

Europe's polymer producers are moving closer to establishing a futures market. Polymer players are watching development of the new pulp futures market with interest. The opening of an international options and futures market for NBSK (northern beached softwood craft) pulp has been delayed until late October due to regulatory difficulties.

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The pulp market has been suffering from the same problems the plastics market has been experiencing - the frequency and amplitude of pricing cycles has increased dramatically in recent years. The ability to hedge future commitments is seen as one way of smoothing out these violent swings.

The development of a plastics futures market has been discussed but has never materialised. However this time it appears that pressure from consumers has resulted in a serious attempt to get a futures market up and running. A taskforce is attempting to resolve some of the difficulties.

As in the pulp market, the establishment of benchmark grades and prices is the first step. Sources suggest that a pilot scheme is under discussion.

Producers and the largest convertors - say the European top 50 - would be involved in the exchange.





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