Full details of the changes will be explained on Thursday of this week at the LME’s Plastics Seminar, ‘Entering a New Cycle: The Challenge of Greater Optimisation’.”
Shelf-Life Extension
Effective from 3 July 2006, the time period that PP and LL Plastics Warrants will remain deliverable against an LME contract will be extended from 10 months to 36 months from production. The Exchange will explore the feasibility of introducing a discounting process for product delivered towards the end of its shelf-life. Existing Warrants will be ‘grandfathered’ into the new extended shelf-life period.
Additional Prompt Dates
The change to the prompt date system will mean that, at all times, trading will be possible for settlement in two working days time (Cash), and in addition, trading for the next business day (Cash Today or TOM short) will be allowed. Trading will also be possible for settlement on the first five calendar Wednesdays, inclusive of Third Wednesdays.
The confirmation of the commencement of the additional prompt dates requires the completion of detailed planning across a number of complex IT systems. Once this project planning is completed, the LME will confirm the start date of the trading in the additional prompt dates.
Both changes are the result of recommendations from the LME Plastics Committee, which includes representatives from the plastics industry.
Commenting on the announcement, Neil Banks, Director of Exchange Development said:
“The contracts are trading as we expected and our research and feedback suggests that it’s the right time to make further enhancements. The new developments will make a significant contribution to the liquidity of the contracts and their increased use within the industry.”
Visit the "Plastics enhancements" section of this website for further information.
Background:
- The LME’s Plastics Seminar takes place on Thursday 25th May 2006 at the Millennium Hotel Mayfair – full details are available at www.lme.com/plastics-seminar.asp
- The LME commenced trading in polypropylene and linear low density polyethylene futures contracts on 27th May 2005.
- The shelf-life for plastics was initially extended from 6 months to 10 months on 21 November 2005.
- The LME is the world’s premier non-ferrous metals market.
- The LME turned over 78 million lots in 2005, which equates to around $4,500 billion dollars.
- Trading at the LME takes place through open outcry in ‘the ring’, through an inter-office telephone market and through LME Select.
- The LME announced its intention to develop risk management tools for the steel industry in October 2005 and in May 2006 confirmed that it will work with Platts to publish references prices for steel. If the references prices gain acceptance with industry the LME will consider launching futures contracts, settled against the reference prices.
