|Traders can now sponsor listing of PP and LLDPE brands.|
14 December 2007 – The London Metal Exchange is making changes to its polypropylene and LLDPE futures contracts to encourage greater trading.
In the second quarter of next year, the LME will remove the shelf life for storing plastics that have been delivered against the contracts.
In July 2006, it extended the time period that PP and LLDPE could remain deliverable against an LME contract from 10 months to 36 months from the date of production, but it will now do away with this requirement (PRWmold.wiki 23 May 2006).
This move brings PP and LLDPE into line with practice in the LME’s metals futures market, and has been done because the shelf life and a possible discount structure that was considered by the LME were acting as a disincentive.
It will continue with its “Visibility of Aged Warrants” system, a daily report which provides the market with information on ageing material.
Other changes have also been made to the plastics futures contracts so that they mirror the LME’s metals contracts. The contract basis will be changed from “free on truck” (FOT) to “in warehouse”.
The LME will also modify the brand listing process to allow plastics merchants, traders or LME members to sponsor the listing of an LME brand. Some PP and LLDPE producers had previously listed their brands with the LME and they will be contacted so that the changes can be explained, it said.
LME chief executive Martin Abbott said: “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.
“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.”