22 February 2011 11:29 [Source: ICIS news]
SINGAPORE (ICIS)--Linear low density polyethylene (LLDPE) futures on the Dalian Commodity Exchange (DCE) fell 1.6% on Tuesday as investors took profits, local futures brokers said.
Liquidity focused on the May contract which closed at yuan (CNY) 11,975/tonne, 1.6% or CNY200/tonne ($30/tonne) lower from Monday’s settlement price of CNY12,175/tonne, according to DCE data.
Tuesday's trading activity was also due to investors who sought to lock in their profits by taking "sell" positions on the futures market, said Jack Hua, a petrochemical analyst at CITIC Newedge Futures in ?xml:namespace>
These investors have physical LLDPE cargoes on hand but are unwilling to accept the prevailing physical market prices, and hence they choose to lock in their profits by taking a "sell" position on the futures market, he said.
LLDPE was trading at around CNY11,000/tonne EXWH (ex-warehouse) in the domestic physical market, according to local distributors.
An investor with physical cargoes on hand would have locked in a few hundred yuan of profit by taking a "sell" position on the futures market at Tuesday's closing price of CNY11,975/tonne.
The investors refused to accept the current physical market prices because they believe prices would increase in the weeks ahead as a result of high global crude prices, said Hua.
($1 = CNY6.58)
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