APLA '07: Brazil producers watch speculators

19 November 2007 19:05  [Source: ICIS news]

BUENOS AIRES (ICIS news)--Brazilian petrochemical producers are keeping an eye on the development of speculative trading on the futures and derivatives markets for plastics and olefins, sources said on Monday.

Speaking from the sidelines of the Latin American Petrochemical Association (APLA) meeting, producers said that their participation on the London Metals Exchange (LME) remains light.

While producers welcome the ability to hedge the physical trade, there is also concern that these markets could create more volatility for prices that could have a negative impact on the physical market.

“It has not really affected prices,” said an executive at one large Brazilian producer.

Speculative trading in olefins and plastics is still in its early stages and as the markets deepen, producers would likely engage in more active trading of contracts as a business strategy, the executive said.

A source with another large Brazilian producer agreed with this sentiment, stating that producers have a competitive edge over financial speculators due to their familiarity with the complexities of the chemical markets.

Brazil is Latin America's largest petrochemical producer.

By: John Waggoner
+1 713 525 2653

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