Dalian Commodity Exchange (DCE) today released the Linear Low Density Polyethylene (LLDPE) futures contract draft including specification and relevant articles to request for comment from public. It's the first time that DCE releases its designed plastic contract.
According to the director of Research Dept of DCE, the design of LLDPE contract follows the principle of safety, relevant to spot market and internationalization to make the contract suitable for more huge real market and bigger deliverable volume. The deliverable grades, daily price limit and specification is similar to spot market and reflects the productions, logistics and consumption of physicals. Considering the trait that the domestic LLDPE is highly internationalized and frequently traded in international business, DCE absorbs the experience of LME in designing plastic contract to adjust to trade customs and domestic reality.
LLDPE will be traded in 12 consecutive months every year. Daily price limit and minimum initial margin is 4% and 5% respectively. Contract size is 5 tonnes with a 5 YUAN tick size. The trading commission is not expensive than 8 Yuan per lot/side. The last trading (LT) day and delivery date is the 10th business day and two days after the LT day severally. The contract will be physically delivered.
Among all kinds of Polyethylene (PE) products, LLDPE owns a huge trading market and is densely branded suitable for standardization. The deliverable grades of LLDPE must abide by the regulations of "The Deliverable Grade Standard for LLDPE of DCE." Meanwhile, the following items must be shown on the original package of LLDPE products (not heavier than 25kg/bag): trade mark, name of product and factory, standard code, brand, batch number and net weight.