NCDEX seeks FMC nod for polymer futures

The National Commodity & Derivatives Exchange of India (NCDEX) has sought approval from the Forward Markets Commission (FMC) to launch futures trade in polymers.

The exchange is planning to launch three polymer contracts "� polypropylene (MFI-10-12 prime grade), polyvinylchloride (PVC) and LLDPE(MFI-0.85-1.00).

The contract size of 5 metric tonne would be traded in ruppee terms with delivery at ex-Bhiwandi. The polymer will be packaged in 25 kg packs.

"The rationale behind launching polymer contracts is the frequent prices changes in raw material including oil, natural gas and naphtha which represent up to 65 per cent of final product cost," a source at NCDEX said.

Apart from this, the contracts will also help players discover PVC prices intermittently on a regional platform based on supply and demand trends .

At presently the Multi Commodity Exchange of India (MCX) trades in PVC while the London Metal Exchange has polymers in the international arena.

LME launched futures contract in LL film non-slip grade in June 2005 with delivery centre in Houstan, Rottardam and Singapore. The NCDEX, though, has selected a more widely accepted benchmark grade in the slip variety of LL film butene grade.

There are more than 40 various grades in polyethylene available in India. Of the total 1,550 kil tonne business of polyethylene in the country, the LLDPE butene film market is more than 240 kta representing the largest application sector in films.

"We have selected LLDPE film butene grade with a Melt Flow Index of 0.85-1 and density of 0.916-0.920," an NCDEX source said.

The grade is used by large processors industry including the organised and unorganised market.

Polymers is in its finished state contains a synthetic polymer of high molecular weight, is flexible or rigid but not elastic in its finished state. It can be shaped by flow or by in-situ polymerisation or curing.

It comes in solid state in form of pellets of natural white colour (polypropylene and polyethylene) and as a white powder in form polyvinyl chloride.

Polymers represent nearly two thirds of major commodity thermoplastics usage in the world. In 2004, of the 160 million metric tonne (mmt) market, demand for commodity polymers totalled 130 mmt.

In India, the production of petrochemicals began with the setting up of small plants (because of low demand) in the late 1950s and early 1960s using non-petroleum feedstock.

Low density polyethylene (LDPE) was produced based on alcohol, polyvinyl chloride (PVC) from calcium carbide, and styrene butadiene rubber (SBR) and polystyrene (PS) from coal-based benzene.