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With effect from 28 April 2008 The London Metal Exchange (LME) made changes to its plastics futures contracts for polypropylene (PP) and linear low density polyethylene (LL) which aligned the plastics futures contracts with the model for the successful metals futures contracts.
Following a recommendation from the LME Plastics Committee, and a decision by the LME Board, the Exchange introduced the following changes:
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The contracts moved from a free on truck (FOT) contract basis to an in-warehouse basis, as used for LME non-ferrous metals. It became no longer necessary for the party placing the material on warrant to pay the cost of loading the material from the warehouse onto a flatbed truck for outward delivery. This is the responsibility of the party taking up the warrant through the clearing mechanism.
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The shelf life for LME Plastics Warrants was removed to facilitate greater liquidity through financing of material on warrant. Visibility of aging warrants continues to be provided through daily reports from the Exchange. This report can be requested by emailing lmehelpdesk@lme.com.
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The brand listing process was modified to allow plastics traders, distributors or LME members to sponsor the listing of an LME brand with the the knowledge of the producer and a Letter of Support from a recognized user of the product.
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The latest warehouse arrival date was extended from month of production plus 4 months to month of production plus 11 months and the requirement for a warrant to be created within 18 months inclusive of the production month was removed.
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