20 April 2007 – The National Commodity & Derivatives Exchange (NCDEX) in India has started trading in polypropylene, linear low density polyethylene and polyvinyl chloride.
Managing director and chief executive of NCDEX, PH Ravikumar, said: “Currently polymer producers, processors, and distributors/ traders are highly vulnerable to volatility in raw material prices and have very little bargaining power against suppliers. We have launched the polymer futures contract to alleviate this situation.”
Reliance Industries, India’s major polyolefins producer, has shown support for the launch. Chairman and managing director, Mukesh Ambani, pointed out the potential for local market growth, saying that per capita consumption of polymers in India is 4.2 kg, compared with a global average of 25 kg.
Targeted at the Indian market, the NCDEX plastics futures differ from the global contracts for PP and LLDPE traded on the London Metal Exchange, which are being relaunched in July.
The unit of trading is 3 tonnes and NCDEX accredited warehouses are located at Bhiwandi and Delhi. Exchange approved local and imported grades can be delivered at these locations.
NCDEX has set a daily price fluctuation limit of 6% for the contracts. In addition, members and individual clients are only allowed to hold positions up to 20,000 tonnes and 5,000 tonnes respectively.
The exchange establishes spot prices twice a day through a polling process, in which it randomly calls up 20 market participants from a panel of 40. The prices are then processed to remove those that are too far away from the mean and the remaining prices are then averaged.
