The London Metal Exchange has recovered from the terrorist attacks that rocked the British capital last month and is reporting positive growth in its fledgling plastics futures market.
One of the four explosions that hit the city on July 7 occurred at the Aldgate Tube Station, located about 500 yards from the LME office, LME spokesman Adam Robinson said in a recent phone interview from London.
The blast occurred shortly before 9 a.m. Police then blocked off the building and would not allow anyone exiting the site to return. This prevented many traders from reaching the exchange for its 11:45 a.m. trading start.
The exchange continued trading electronically and by phone throughout the day, although volume was reduced. The exclusion zone was enforced until 10:30 a.m. on July 8, allowing the market to reopen with full trading.
``We were completely back to normal on July 8,'' Robinson said. ``It was a typical Friday.''
LME officials were preparing the organization's disaster recovery site - a trading location outside of the city - but did not have to use it. LME also was unaffected by a second round of planned attacks on July 21, in which several explosive devices failed to detonate.
``There's heightened security around transportation, but other than that, things really haven't changed,'' Robinson said.
With the return of normalcy, LME officials are enthusiastic about the progress made in its inaugural trading of futures contracts based on polypropylene and linear low density polyethylene. From the May 27 debut through the end of July, LME had traded 1,768 futures lots of PP and 1,176 futures lots of LLDPE.
Based on its standard lot size, that means LME had almost 100 million pounds of PP and almost 65 million pounds of LLDPE under contract.
Robinson said start-up totals for PP and LLDPE compare favorably with similar numbers from LME's launch of aluminum futures in 1978. LME's aluminum number now is accepted as standard pricing in that industry.
``We want slow, steady growth - we don't want our volume to leap all over the place,'' Robinson said. ``The volumes are small when compared with our other [metals] contracts, but volume has been very consistent and the spreads between bids and offers have been very tight. That leads us to believe we're in line with the physical market.''
As of Aug. 8, LME PP buyer futures for September were $1,120 per ton (51 cents per pound), dropping to $1,100 (50 cents) in October and $1,095 (49.7 cents) in November.
For LLDPE, LME September buyer futures were $1,100 per ton (50 cents per pound), again dropping to $1,080 (49 cents) in October and $1,075 (48.8 cents) in November.
Robinson said no information was available as to how plastics futures purchased to date have been split between Europe, North America and other parts of the world.
The exchange also is considering the addition of futures for PET bottle resin and PVC. PET in particular is ``a strong contender'' to be added, Robinson said.
In late July, LME added PP made by Formosa Plastics Corp. USA and Tiszai Vegyi Kombin t Rt. to its product offering. Formosa is based in Livingston, N.J., and owned by Taiwanese conglomerate Formosa Group. TVK is based in Tisza£jv ros, Hungary. LLDPE made by Formosa was added as well.
LME's initial PP suppliers are Dow Chemical Co., Innovene Europe Ltd., Chemopetrol AS, Thai Polypropylene Co. Ltd. and Reliance Industries Ltd. In LLDPE, futures are based on material from Dow, Innovene, Reliance and Thai Polyethylene Co. Ltd.
A pair of warehousing locations in the Baton Rouge, La., area also were added for physical delivery, which occurs in less that 5 percent of LME futures transactions. Both locations are in Port Allen, La., one operated by Henry Bath Inc. and the other by Katoen Natie Louisiana LLC.