Plastics to be traded on the London Metal Exchange

27-May-05

There is a global awareness that raw materials have for some time been in short supply, leading to price volatility. Price volatility in the petrochemical industry rose to 10% in 2003 from 6% in the 1990s, as per a global provider of energy information and news. Is there any way to protect both the buyer and seller who are exposed to a high level of price risk due to price volatility? The answer seems to be in futures contracts will give the industry the ability to manage price risk for the first time, enabling it to better forecast profits and concentrate on its drive for innovation. With this in view, the London Metal Exchange (LME) will today launch global futures contracts for polypropylene (PP) and linear low density polyethylene (LLDPE). The contracts will let companies hedge against larger-than-average gains and declines in prices. Barclays Plc, Man Group Plc and eight other companies may trade plastics on the London Metal Exchange for the first time today as they seek to boost fees while offering plastics manufacturers and users protection from price swings.