Chem Systems Europe '04: Polymer futures launch set for Q4

11 February 2004 18:08  [Source: ICIS news]

LONDON (CNI)--Polyolefins futures contracts are expected to be launched on the London Metals Exchange (LME) early in the fourth quarter of this year following extensive discussion between the exchange and industry participants, it was revealed here on Wednesday.

The LME is currently in an advanced stage of consultation with industry and potential market makers on the design of contracts for polypropylene (PP) and linear low-density polyethylene (lldPE), Eddie Wilson of consultants Chemair Technologies told the Nexant Chem Systems annual European conference*.

This is expected to be phase one of a two phase introduction of polymer contracts onto the exchange.

Phase two is the expected launch of contracts for high density polyethylene (hdPE), low density polyethylene (ldPE) and PET (polyethylene terephthalate). Initial work on these contracts is planned to start during the current quarter with a launch six months after the release of phase one contracts.

The reference product for PP is a general purpose, ‘barefoot’ injection moulding homopolymer having a melt index of 12, Wilson said. The reference product for lldPE will be a general purpose film grade containing slip and anti-block of butane co-polymer having a melt index of 0.8.

Wilson told the conference that delivery points will be Antwerp, Houston and Jahore in bags. The traded lot size will be 20 tonne, he said, and the contract will be free on truck or rail, duty and taxes unpaid.

The petrochemical industry has sought to hedge its exposure to volatile raw material costs through a futures trading platform on previous occasions with little success.

However, LME polymers contracts will be designed primarily to serve the interest of industrial participants, Wilson said.

The views of financial participants will be sought but in the event of a disagreement the interests of industrial participants will prevail, he said.

*Chem Systems Annual European Chemicals and Petroleum Seminar; organised by Nexant ChemSystems is being held at the Royal Garden Hotel, Kensington and continues tomorrow.

By: Nigel Davis
+44 20 8652 3214

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