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On Monday 5 February, The London Metal Exchange (LME) confirmed details and timescales for the introduction of major changes to its plastics futures contracts, for polypropylene and linear low density polyethylene, which it introduced in May 2005.
Effective 25 June 2007 , the Exchange will introduce three new regional contracts, in addition to the existing global contracts, and it will introduce additional prompt dates to more closely reflect the prompt date system currently available for non-ferrous metals.
The changes to the contracts are the result of a recommendation from the LME Plastics Committee, which includes wide representation from across the plastics industry, and follows detailed consultation with the Exchange's members and stakeholders.
Regional Contracts
- The introduction of three new contracts, deliverable in bags, and one in each region (Asia, Europe and North America) for each of the PP and LL contracts; the creation of six new contracts in total.
- Contract specifications and delivery points for each regional contract will be identical to their existing equivalent global contract.
- All brands that meet the listing criteria for global contracts will be automatically listed for the relevant regional contract.
Additional Prompt Dates
New prompt dates will be introduced, across the global and new regional contracts, to provide more granularity in the nearby dates and therefore to facilitate spot trading:
- Trading for prompt dates 1 (TOM) and 2 (Cash) days forward will be available on a rolling basis. Additional prompt dates will be allowed in the nearby weeks, and monthly prompt dates in the forward month basis the Third Wednesday of the month, will continue.
- The LME Official Prices will be the Cash price and the first and second month prices (Third Wednesdays), with the current third month price being dropped, no longer being an Official Price.
Find out more about the new regional contracts and additional prompt dates by visiting the plastics enhancements section of www.lme.com.
