DGCX sets date for plastics launch

Dubai Gold and Commodities Exchange (DGCX) has revealed it is to launch the world’s first region-specific plastics futures on February 5, 2009. The futures contracts will be provided on linear low density polyethylene (LLDPE) and polypropylene (PP) for the Middle East and South East Asia markets.

“For the first time, plastic futures prices will incorporate local costs and regional demand-supply differences, enabling convergence of futures prices with those of the physical market,” said Malcolm Wall Morris, chief executive officer, DGCX.

Continued capacity expansions in the Middle East, easy access to feedstock and proximity to the high-growth Asian markets have, according to the DGCX, ensured that the region is the hub of global petrochemical trade.

“Price volatility in recent months has put pressure on profitability across the plastics supply chain and downstream firms are looking for innovative ways to minimize this impact. The DGCX plastics futures contract will provide industry participants with a sophisticated hedging tool, enabling them to lock-in future margins,” Wall Morris said.

Initial feedback from market participants in the Middle East and Asia has been very encouraging, said James Bernard, associate director at the Dubai Multi Commodities Centre (DMCC). “Given the significant size and scale of the global petrochemical trade, plastic futures are a key addition to the exchange’s product portfolio and reinforce the strategy of launching the right products at the right time,” he added.

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