The London Metal Exchange's plastics futures program is less than 2 years old, but already is receiving a facelift.
In announcing the firm's ``2 by 2'' growth strategy Jan. 4 in London, LME Chief Executive Martin Abbott said LME's plastics contracts may become regional - rather than global - in nature and may include spot trading. Details of the changes will be announced by the end of January, he said.
Previously, exchange development director Neil Banks said contracts longer than the original 10-month limit would be able to reflect more spot-market activity.
In a May interview with Plastics News, Banks said such a move was being considered.
Abbott described the pending adjustments as ``effectively a relaunch,'' but he declined to indicate if the new contracts will replace existing ones the LME has in the plastics market.
The LME's plastics futures were launched in May 2005, based on common grades of polypropylene and linear low density polyethylene.
After its first year, the program had executed 23,000 PP contracts and 14,000 LLDPE contracts. Those contracts covered more than 1.2 billion pounds of PP and almost 750 million pounds of LLDPE, although less than 10 percent of the firm's contracts result in physical delivery.
Futures contracts essentially are a means for buyers and sellers to hedge against major fluctuations in the selling prices of commodity materials. They're common in agricultural products and commodity metals, but attempts during the past decade to establish them in plastics have met with mixed results.
Officials with LME also have said the firm is considering adding PVC and PET bottle resin to its plastics futures portfolio.
