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DGCX Plans to Launch Plastics Futures Next Year

DUBAI — The Dubai Gold & Commodities Exchange (DGCX), the region’s first electronic futures market, on Wednesday announced the launch of the world’s first region-specific plastic futures on February 5, 2009.

DGCX will offer plastic futures contracts on Linear Low Density Polyethylene (LLDPE) and Polypropylene (PP), creating a new and transparent pricing mechanism specific to two regions — the Middle East and South East Asia.

Ahead of the launch, DGCX has approved leading warehouses and Delivery Point Operators.

“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,” Malcolm Wall Morris, Chief Executive Officer, DGCX said.

The petrochemical sector and its downstream industries are key drivers of economic growth in the Gulf region.

Capacity expansion, easy access to feedstock and proximity to the high-growth Asian markets have ensured that the Middle East 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 minimise 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).

issacjohn@khaleejtimes.com