The London Metal Exchange is considering an expansion of its business in plastics futures by adding three resins to its portfolio: PVC, PET and high density polyethylene.
The information was released Oct. 20 by Jeremy Goldwin, global head of industrial commodities of Sucden (UK) Ltd. Sucden is one of 11 brokers that operate plastics futures for LME. Goldwin was in Sao Paulo taking part in the International Forum on LME's Plastics Futures.
``LME said that, if the current contracts succeed, they will consider adding further contracts,'' he said. He added, however, that it would take at least six months before any resins would be added.
The exchange started its activities in plastics futures in May, launching contracts for polypropylene and linear low density PE. Since then, roughly 20,000 contracts have been traded - 70 percent being PP and 30 percent LLDPE - but only a few have resulted in actual product delivery.
According to Goldwin, LME's first deliveries started in September, when 140 contracts were delivered. Another 40 were delivered in October.
The one-day forum, also called Invest Plastic, was promoted as a discussion of the feasibility of plastics futures as an alternative, secure business channel for Brazil and all of Latin America.
The forum was organized by Petronews, a local Internet portal that produces and discloses analytical information about chemical and petrochemical products (www.petronews.com.br).
``We believed that a forum would be the best way to introduce and clarify the basis of this new dynamic for doing business,'' said MariÃ¢ngela Guazelli, an Asian and European markets consultant at Petronews. Another goal of the event was to divulge procedures for registering and approving resins at LME.
Roughly 100 people attended the event, which included executives from resin producers and molders, as well as financial market professionals.
``In the position of resin producer, we need to stay on top of things and learn about this type of business. It's an additional channel for selling in the market and we have clients that could go for this type of thing,'' said Marcos Rossatti, commercial manager at PE maker Rio Pol¡meros SA in Rio de Janeiro, Brazil.
Most sales in Brazil's petrochemical industry are based on relationships, he said.
``Processors are generally family-owned companies where the owner is directly involved in the purchase of raw materials. We still do business in a very personal manner, and this could represent an obstacle referent to the advancement of this new concept,'' Rossatti said.
Guazelli, who has been in contact with LME for more than a year, said LME would consider installing a warehouse in Brazil to supply the local market.