Online edition of India's National Newspaper
Saturday, Aug 20, 2005
Online edition of India's National Newspaper Saturday, Aug 20, 2005 |
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Special Correspondent
MUMBAI: Multi Commodity Exchange of India Ltd. (MCX) announced the launch of polypropylene (PP) and high density polyethelyne (HDPE) futures for the first time in Asia, beginning this month, for September and October contracts. "In India, consumption of polypropylene is very high considering its extensive usage for a wide range of products from cement, packaging, monofilament, yarn, ropes etc. "Introducing futures in PP and HDPE will enable traders to hedge their risks on MCX and benefit from the price discovery on the exchange platform. On the MCX platform, traders can avail themselves of neutrality and transparency with no counter-party risk,'' said Nikhil Meswani, Executive Director, Reliance Industries Ltd, while launching plastic futures. Jignesh Shah, Managing Director, MCX, said the launch assumed significance at a time when the polymer market was showing high price volatility. The presence of domestic heavyweights like Reliance (IPCL), GAIL and Haldia Petrochemicals highlights the importance of polymers in the country, he said. The trading unit for PP and HDPE contracts is specified at two tonnes by the exchange. The price quotation will be ex-Bhiwandi (exclusive sales tax/VAT and octroi) per Rs./kg. The tick size of the contract is 10 paise with a daily price limit of two per cent. Trading in a contract month will open on the 21st of the month and would run for three months. Each contract would expire on the 20th day of the contract month. There would be an initial margin of three per cent. Delivery will be in lots of ten tonnes. India ranks eighth in the world in terms of consumption of plastics and is expected to be the third largest consumer of plastics after US and China by 2010. Today, India has an estimated production capacity of 4.5 million metric tons annually of polymer. Of this, 60-70 percent accounts for the production of polyethylene (PE) and polypropylene (PP).
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