UAE-based DGCX to commence 12 futures contracts for plastics covering PP, LLDPE, LDPE and HDPE

25-Aug-08

To offer protection against the instability of prices in cyclical petrochemicals market, UAE-based Dubai Gold & Commodities Exchange (UGCX) has disclosed its plan to commence the Middle-East's first futures contracts for plastics this year. Dubai Multi Commodities Center has 51% stake in DGCX while India's Financial Technologies Group and Multi Commodity Exchange (MCX) hold 49% stake. As per a senior authority in DGCX, 12 futures contracts in plastics are set to be launched comprising of PP, LLDPE, LDPE and HDPE across the regions of Middle East, northeast Asia and southeast Asia. With the major petrochem companies like SABIC and Dow Chemical Co outlaying investments in the Middle East due to cheaper availability of natural gas and the increasing demand for plastics in Asia, it is an ideal opportunity for DGCX with Middle East witnessing a growth in petrochemical and polymer production. It is expected that a high percentage of physical deliveries will be made for the first few delivery months; however, the vast majority of the contracts traded over the first year will be financially settled with a relatively low percentage of physical delivery.