LME reveals detailed plastics contract specifications

10 June 2004 16:42  [Source: ICIS news]

LONDON (CNI--The London Metal Exchange (LME) on Thursday released details of the contract specifications for the two plastics contracts due to be traded on the LME before the year-end.

 

Futures contracts for polypropylene (PP) and linear low density polyethylene (lldPE) will be tradable for each month to 15 months forward.

 

The specifications are being released as part of the launch process of plastics futures on the LME to give producers, consumers, traders and LME members time to prepare for the contracts launch.

 

“We have engaged with the plastics industry and we are confident that the contract specifications provide the blueprint for the successful launch and continued trading of plastics futures contracts,” LME chief executive Simon Heale said. “We are planning that the exchange will be ready by the end of the year,” he added.

 

The contract descriptions give standard delivery, packaging and pricing details as well as delivery points and features. The PP contract will be based on a ‘barefoot’ general purpose injection moulding homopolymer with a nominal melt flow rate of 12. The second contract will be for general purpose film/blending grade lldPE butene copolymer with a nominal melt flow rate of 0.8 with slip and anti-block additive.

 

The LME said that contracts would be traded in open outcry at 11:45 and 15:55 local time each day in five minute rings with both contracts being traded simultaneously in each ring. Electronic trading would be from 07:00 until 19:00 London time and telephone trading for 24 hours. US dollars are the major trading currency but trading and clearing would be allowed in euro, Japanese yen and pounds sterling.

 

Minimum price fluctuations would be 0.01 currency unit per metric tonne or 0.25 currency unit per contract for dollar, sterling and euro trades and Yen1 per metric tonne or Yen25 per contract. LME official prices will be established at 16:00, the close of the second plastics ring with closing prices established at 17:00.

 

“I am convinced that the plastics industry and the exchange’s membership will find value in this major development and the specifications will allow them to organise their resources in anticipation of the launch,” Heale said.

 

The LME and its member companies are promoting these planned contracts as well as looking at what further related petrochemicals contracts might be made available.

 


By: Nigel Davis
+44 20 8652 3214



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