Trading in futures contracts for three grades of polypropylene (PP),and one grade of linear low-density polyethylene (LLDPE),began on the London Metal Exchange (LME) on May 27.Simon Heale,CEO of LME,anticipates a gradual build-up in trading volumes."We are not expecting huge volumes to be traded in the early weeks and months," Heale says."The measure of success will not be the number of deals but whether over time the plastics industry has enough confidence to base transactions on the LME price.Then a sufficient depth of liquidity will emerge," he says.Financial institutions are also expected to trade plastics futures."The investment community is looking at new areas to invest in," Heale says.Almost all of the 11 "ring dealers" on the LME's trading floor say they have appointed plastics traders."We have clients ready to utilize the new contracts," says Jeremy Goldwyn,head of industrial commodities at brokers Sucden U.K.(London),one of LME's ring dealers.LME will consider launching futures contracts for other plastics,including polyethylene terephthalate and polyvinyl chloride,if LLDPE and PP trading proves successful,Heale says.Meanwhile,Equistar and Carmel Olefins (Haifa,Israel) have joined the list of polyolefin manufacturers whose products may be traded on the futures market (CW,May 18,p.5).Equistar's LLDPE and Carmel's PP may be traded.LME has also named the first warehouse in Houston where LME-traded polyolefins may be stored for delivery.It is the warehouse of Jacintoport International (Houston).LME earlier named several warehouses in the Antwerp Rotterdam,and Singapore,areas where LME-traded polyolefins may be stored.
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