The London Metals Exchange (LME) has started trading regional futures contracts for polypropylene and polyethylene. The new contracts are priced separately according to region, the LME said, covering Europe, Asia and North America. The exchange has traded plastics future contracts priced on a global basis since spring 2005.
Martin Abbott, chief executive of the LME, said he believed the changes will help the industry manage 'intense price volatility' in the market. 'The introduction of regional contracts reflects the variations in the use and trade of plastics around the world,' an LME spokesperson said. '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,' they added.
The LME said it has also introduced a new range of prompt, or delivery, dates for plastics, which could previously only be traded on a monthly basis. The tradeable dates for plastics now mirror those for LME non-ferrous metals contracts, the exchange said.
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