LME aligns plastics contracts with metals model

13 December 2007 16:38  [Source: ICIS news]

LONDON (ICIS news)--The London Metal Exchange (LME) on Thursday said it will align its plastics futures contracts with the model for its more successful metals contracts to attract more participants to the market.

 

The polypropylene (PP) and linear low density polyethylene contracts (LLDPE) have struggled to gain market interest since their re-launch earlier this year.

 

The exchange said that its regional and global plastics contracts would be changed from free on truck (FOT) to the in-warehouse basis used for its non-ferrous metals.

 

The shelf life stipulations currently applied to plastics would be removed, it added, to facilitate greater liquidity, while the visibility of ageing warrants would continue to be shown in daily reports.

 

“The introduction of these changes means that the plastics contracts will operate in the same way as the established model that we have successfully used in non-ferrous metals for the last 130 years,” said LME chief executive Martin Abbott.

 

“Collectively, these changes will help attract more participants and material to the market; increasing liquidity and contributing to the long-term success of the contracts,” he added.

 

In addition, the brand listing process would be modified to allow plastics merchants, traders or LME members to sponsor the listing of an LME brand.

 

“The listing will be introduced as soon as possible and after the sufficient period of notice has been given,” the LME said in a statement.

 

The LME commenced trading in plastics futures contracts in May 2005.

 

Regional contracts were introduced in June 2007, but have failed to attract close to the level of activity as the LME’s more established contracts.


By: Mark Watts
+44 20 8652 3214



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