New plastics futures to trade on NYMEX

Two new plastics futures are set to be launched on the New York Mercantile Exchange (NYMEX) on June 6.

The 24-month contracts will be for a blow molding grade of HDPE and a film grade of linear low density PE (LLDPE). Pricing data will be provided by West Ornage, N.J.-based consulting firm The PetroChem Wire.

Unlike the contracts for PP and LLDPE created by the London Metal Exchange in May 2005 and NYMEX’s previous plastic contracts on blow molded HDPE and PP, these newest contracts represent paper options for risk-management services in which there is no actual delivery of physical resin.

A futures contract is a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality at a specified future date at a price agreed today, as a means of managing the risks associated with price volatility, and also of setting prices and locking in margins.