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In the Press

NCDEX Polymer Futures By Sept The Financial Express,29 June 2004

India is set to be the first in the world to launch polymer futures by September this year. The National Commodity and Derivatives Exchange (NCDEX) has set the the ball rolling in this direction. Pending energy futures, especially in the absence of hedging mechanism for crude oil, the polymer sector will be able to cover its price risk through the novel product.

Polymer futures will provide a platform for Rs 26,000-crore domestic industry dominated by Reliance Industries, IPCL, Haldia Petrochemicals and Gail India Ltd. Futures trading will also provide price risk hedging mechanism to 16,000 odd small scale units in the polymenr and plastic sector

If launched in time, NCDEX will be the first commodity exchange in the world to launch futures trading in polymers that are also popularly called as 'plastic commodities futures'. London Metal Exchange (LME) has already announced its intention of introducing plastic commdities futures by December 2004.

NCDEX is currently designing the products to be offered for futures trading in polymers sector. Said NCDEX chief executive officer (CEO) and managing director PH Ravikumar said: "We are working on this concept and plan to launch the product by September-October this year."

NCDEX is likely to be ready with designing plastic commodities contract paper over the next two months. Details for plastic commodities contract, size and deliverable form/packaging etc will be finalised.

NCDEX will enter the league of leading international commodity exchanges offering novel derivative products used not just by the manufacturers, processors and traders but also by small-scale plastic processing units across the nation.

"During the last couple of months, we had tremendous inquiries from plastic processors about the availability of future instruments for hedging the risk against volatility in prices of polymers which are directly linked to international crude prices," said Mr Ravikumar.

Welcoming the move, All India Plastic Manufacturers Association (AIPMA), spokesperson said: "In India, plastic futures, if made available would prove immensely beneficial, especially to the country's 16,000 small processing sector as a whole, which is highly dependent on international price trend and now able to hedge the risk against the price volatile."

Sajjid Mitha, CEO, polymerupdate.com, the only plastic portal of its kind in the international market and with over 5,000 subscribers based in India, said "Given the volatility in the global polymers prices, a new risk management device to be launched by the NCDEX will be beneficial." "Local players across the sector will be benefited not only against local price volatility but also, against international prices. Hence, NCDEX and LME future tools will have good potential in the market." Mr Mitha said and added that the new plastic commodities future products will prove to be a boon for the plastic industry in the days ahead."

Meanwhile, LME has proposed two plastics contracts for the initial launch. Polypropylene (PP) homopolymer general purpose injection moulding grade nominal melt flow rate 12 'barefoot' and Linear low density Polyethylene butene (LLDPE) copolymer general purpose film/blending grade, nominal melt flow rate 0.8, with slip and anti-block additives.

The major trading currency will be dollars. There are various plastic commodities available and traded in the market and traded in the among them PP, HDPE, LDPE, LLDPE, PS, SAN, ABS, PVC, and PET.