PP Futures Trading Kicked off in Dubai and China
Commodity exchanges in Dubai and China simultaneously began trading polypropylene futures on 28 February.
The Dubai Gold & Commodities Exchange said its contract, sized at 5 t, with prices quoted in U.S. dollars per metric ton, will be the first in the Middle East region and "will create a transparent market and new pricing benchmark." Warehouses in the Jebel Ali and Dubai World Central free zones have been approved for delivering the products.
The contract was launched concurrently with that of China's Dalian Commodity Exchange to raise substantial liquidity for the global trading of the products, under a memorandum of understanding signed by the two exchanges in 2012.
According to reports, one PP producer in the Gulf Cooperation Council (GCC) region has linked itself to the contract and is expected to make first deliveries in July 2014.
Gary Anderson, CEO of the Dubai exchange, said the GCC region produces more than 50 million tons of plastics a year with a significant percentage exported to the Far East. "We believe our plastics futures contract will be a key risk management tool for all participants in the plastics supply chain, including producers, traders, converters and end-users," Anderson said.
According to the Gulf Petrochemicals & Chemicals Association based at Dubai, the demand for polypropylene is increasing at a rate of 8%. Nearly three-quarters of current production - Saudi Arabia is the region's largest producer by far - is exported.
