LME: Regional Plastics Contracts
The trading of regional futures contracts for polypropylene (PP) and linear low density polyethylene (PE-LLD) began trading on the London Metal Exchange (LME). In addition to a global price for each contract, prices are now established and published by the Exchange for Asia, North America and Europe, bringing the total number of LME plastics contracts to eight. The LME also launched the facility for ‘spot’ trading with a new daily prompt date structure which mirrors the model the Exchange currently operates for non-ferrous metals. The introduction of regional contracts reflects the variations in the use and trade of plastics around the world. They provide the plastics industry with reference prices which more accurately reflect the pricing dynamics of each region, and therefore more accurate price correlations with physical market prices. The introduction of additional prompt dates provides the industry with valuable daily ‘spot’ reference prices and offers market participants the full flexibility of a range of trading dates in the nearby months.
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