The LME also today launched the facility for ‘spot’ trading with a new daily prompt date structure which mirrors the model the Exchange currently operates for non-ferrous metals.

The introduction of regional contracts reflects the variations in the use and trade of plastics around the world. They provide the plastics industry with reference prices which more accurately reflect the pricing dynamics of each region, and therefore more accurate price correlations with physical market prices. The introduction of additional prompt dates provides the industry with valuable daily ‘spot’ reference prices and offers market participants the full flexibility of a range of trading dates in the nearby months.

Commenting on the launch, Martin Abbott LME Chief Executive said:

“I am delighted to confirm the successful launch of regional LME plastics futures contracts and the new additional daily prompt date structure. These changes offer the plastics industry a valuable set of tools with which to better manage the intense price volatility it continues to experience.”

Neil Banks, LME Director of Exchange Development said:

“Since the launch of the global contracts in 2005 the Exchange has continued to listen and respond to the needs of the plastics industry, and these changes are the result of that process. The value of the enhancements will not be seen overnight. However, over time it is hoped that they will significantly improve the liquidity in the contracts and therefore their wider use by the global plastics industry.”

The Changes

1.       Regional Contracts

• The introduction of three new contracts, deliverable in bags, and one in each region (Asia, Europe and North America) for each of the PP and LL contracts; the creation of six new contracts in total.
• Contract specifications and delivery points for each regional contract are identical to their existing equivalent global contract.
• All brands that meet the listing criteria for global contracts are automatically listed for the relevant regional contract.

2.       Additional Prompt Dates

With effect today, the tradable dates for plastics now mirror those for current LME non-ferrous metals contracts, with the dates as follows:

• Cash tomorrow (TOM) – first tradable on 26 June 2007 for prompt 27 June 2007
• Cash
• Every good business day out to 3 months
• Every Wednesday in months 4, 5 and 6
• Every Third Wednesday of the month in months 7 to 15

To accommodate trading of the new contracts the Exchange has divided the current 5 minute ‘ring’ trading sessions into two 2 minute sessions, one for LL and one for PP, separated by a 1 minute break.

Notes for Editors

1. The LME commenced trading in plastics futures contracts on 27 May 2005.
2. Today’s announcement follows previous LME press notices confirming the changes issued on 5 February and 22 February 2007.
3. Trading at the LME in non-ferrous metals and plastics takes place across three platforms: through open-outcry trading on the “Ring”; through an inter-office telephone market; and through the electronic trading platform LME Select.
4. Delivery points for the contracts are in LME approved facilities in free trade zones, specifically – Houston, Baton Rouge and Mobile in North America; Antwerp / Rotterdam area for Europe, and for Asia: Singapore and Port of Tanjung Pelepas (PTP), Malaysia.
5. The LME is the world’s premier non-ferrous metals market and achieved volumes of 87 million lots in 2006, an increase of 10.6% on 2005 figures and equivalent to $8,100 billion in monetary terms.  

Supporting Resources

To support the marketing and education for the introduction of the new contracts, the LME has undertaken the following activity:

1. A programme of free international hedging workshops throughout 2007, for the plastics industry, to help them learn more about LME pricing and the benefits of hedging. Dates and locations available at: http://www.lme.com/plastics07.asp
2. Creation of an interactive online learning module dedicated to LME plastics, which explains LME pricing and hedging using real world scenarios. Access to the module is free via a simple registration process a the following link: www.lmeplastics.com/learning
3. Collaboration with Plastics and Rubber Weekly, European Plastics News and Asian Plastics News to sponsor and produce a practical guide on LME plastics futures – available at: http://tinyurl.com/2qfsab
4. Production of a new LME plastics futures brochure, also available in Chinese: http://www.lme.com/plastics-resources.asp
5. All market data to support plastics contracts, including prices, volumes and open interest, is now available exclusively and free of charge for a limited period of time via the LME website, at the following link: www.lme.com/dataprices.asp.

Press enquiries to:       Adam Robinson +44 (0) 20 7264 5532