LME to announce spot markets in PP and LLDPE

10-Jan-07

The London Metal Exchange (LME) plans to add feature to its plastics futures trading to reflect practices in the physical supply market, including possible regional contracts. At the request of polyolefins major Basell, the LME has been developing a "prompt date" structure to create the futures equivalent of the PP and LLDPE spot markets. The current structure of trading forward months will be retained, but trading will also become possible for spot dates leading up to the first forward month. LME has also been exploring regional contracts for PP and LLDPE. The current contracts have globally-based prices, while new regional contracts would reflect the physical market's geographical differences. Although no decision has yet been made, the North American region is likely to get its own contract, that would deal with the specific transportation set-up in the North American market, where polymer is typically sold for delivery by railcar, not in the bagged form that the LME's current contracts are based on.