LME relaunches plastics futures with regional focus

The London Metal Exchange has relaunched its futures contracts for polypropylene and LLDPE this week, with its sights set on industry participation, albeit from a slow start.

New regional contracts for PP and LLDPE in Europe, Asia and North America have been added to the global contracts that were initially started in May 2005. The other major enhancement is the start of spot prices for all these contracts, in addition to the existing monthly prices for every month up to 15 months forward.

LME chief executive Martin Abbott said the start of trading in the new contracts yesterday had been successful. “These changes offer the plastics industry a valuable set of tools with which to better manage the intense prices volatility it continues to experience,” he said.

Only small volumes have so far been traded in the new plastics futures contracts. LME director of exchange development Neil Banks said: “The value of the enhancements will not be seen overnight. However, over time it is hoped that they will significantly improve the liquidity in the contracts and therefore their wider use by the global plastics industry.