Trading Of Plastics Futures Contracts Begins On The London Metal Exchange

Trading of plastics futures contracts, for polypropylene and linear low-density polyethylene, commenced today at The London Metal Exchange (LME).

Futures contracts will enable the plastics industry to hedge against volatile polymer prices for the first time. The industry will additionally benefit from a globally recognised price, ‘discovered’ in a transparent and well-regulated environment, which can be used as the basis of physical supply contracts.

Since announcing its intention to launch the contracts, the LME has undertaken detailed research and consultation to ensure the contract specifications fully meet the needs of the plastics industry. To help organisations understand the implications and practicalities of futures contracts, the LME has also carried out an extensive schedule of international roadshows and is now also delivering an educational training programme, details of which can be found on the LME web site.

Commenting on the launch, LME Chief Executive Simon Heale said:

“The plastics industry has suffered from extreme price volatility for many years with, to date, no price risk management tools. These new contracts will enable the industry to manage price risk effectively, to better forecast profits and so concentrate on its drive for innovation.

I am delighted to confirm that the trading of plastics at the LME begins today. I believe that, with the LME’s experience and reputation, we are ideally positioned to ensure that these contracts are a success.”