The Dubai Gold & Commodities Exchange (DGCX) announced today that it will launch a portfolio of four plastics futures contract products, which will provide producers, traders, distributors, converters and other plastics consumers with a tool to hedge price risk. The launch is seen as key to meeting the demand for an efficient and transparent pricing system specific to the plastics sector in the Middle East, and will highlight the GCC’s central role in the global plastics and petrochemical industry.
Development of the DGCX plastics contracts is being coordinated by the Plastics Division at Dubai Multi Commodities Centre (DMCC). DMCC has constituted an Advisory Committee of plastics industry experts to focus on plastics contracts in the Middle East, North Africa and Asia. The Committee is now in the process of finalizing the details of the various contracts. A recent study conducted by the Plastics division at DMCC has confirmed the demand for an efficient and transparent pricing system specific to the plastics sector in the Middle East.
The four plastics futures contract grades being launched are Low Density Polyethylene, High Density Polyethylene, Linear Low Density Polyethylene and Polypropylene. For each grade there will be three regional contracts, namely North East Asia (South Korea), South East Asia (Malaysia and Singapore) and the Middle East (Dubai). DGCX is also looking at including other regions for delivery at a later date.
Dr. David Rutledge, Chief Executive Officer, DMCC; and Director, DGCX said: “Recent market studies show that the Middle East has become the nerve centre of the global petrochemical industry, with the GCC emerging as the world’s largest producer and exporter of petrochemicals and plastics. Over the next four to five years, the region is forecast to see huge volumes coming on line, and it is increasingly becoming the preferred location of international polymer production and conversion. The growth potential of the regional downstream plastic industry can be seen now, and is likely to outpace the ever increasing production levels.”
He continued: “DGCX is the first exchange in the world to announce its intention to launch Middle East plastics futures contracts. It is also the first exchange to declare its intention to focus individually on two regions in Asia, North East and South East. Considering Asia as two regions will add significant value to what is already available and will meet industry requirements.”
James Bernard, Associate Director - Commodities at DMCC, said: “We have been extremely encouraged by the response and support from the petrochemical and plastics industry as a whole and from closely associated financial establishments. Since announcing its intentions in January to add plastics to its commodities portfolio, DMCC has received enormous interest from the industry and has made great progress in a short period of time.
He added: “The Advisory Committee at DMCC comprises highly qualified members from a cross section of the plastics industry, including experts in production, processing, consumption, logistics, financial management and trading. We are confident that the committee will play a large part in giving the industry the best hedging tool possible, which they can utilize both financially and physically.”