Dubai Gold and Commodities Exchange (DGCX) is planning to launch plastics futures contracts to offer hedge against escalating prices, which have increased by 15 to 20 per cent over the past six months.
Details of the proposed plastics futures contracts were unveiled to investors and the plastics community at a workshop organised by DGCX and RBS Sempra Metals, a leading ring dealer member of the London Metal Exchange.
The aim of the workshop was to address the issues facing the industry in relation to managing price risk volatility and to provide the plastics supply chain with a detailed understanding of how DGCX plastics futures contracts can facilitate in managing adverse fluctuations in market prices.
Ryan Younger, trader at RBS Sempra Metals, said: "With the price volatility in the plastics market, producers, traders and converters are looking to protect their margins, and plastics futures provide a tool for market participants to do this."
James Bernard, associate director for commodities, Dubai Multi Commodities Centre, said the recent run-up in polymer prices had the potential to adversely impact participants along the plastics supply chain.
Price volatility coupled with the need to protect operating margins has led to a strong demand for price risk management tools in the plastics industry.