Listing will allow plastics industry to hedge polymer price risk
The Dubai Gold & Commodities Exchange (DGCX) is planning to launch a plastics futures contract on 28 February 2014.
The contract is meant to create a transparent regional market and pricing benchmark for polypropylene, the most common plastic product used in manufacturing and packaging. The deal is sized at 5 tonnes. The DGCX is working with warehouses in the region to ensure physical delivery of the product.
The price of plastics fluctuates, as does the price of other commodities, but currently, market participants in the region do not have the ability to hedge against these fluctuations with a futures contract, says Gary Anderson, chief executive officer (CEO) of the DGCX. We believe this is the opportune time to launch our plastic futures contract in the region, allowing market participants in the plastics supply chain, including producers, traders, convertors and end users, to hedge their polymer price risk.
The GCC produces more than 20 percent of the worlds plastics, with a significant amount flowing into the Far East.
Global production of polypropylene exceeds 65 million tonnes a year (t/y), which is more than twice the annual global production of aluminium.
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