Trading in polypropylene futures went live simultaneously in Dubai and China on 28 February – see Plasteurope.com of 26.11.2013. The concurrent launch by the Dubai Gold & Commodities Exchange (DGCX, www.dgcx.ae) and China’s Dalian Commodity Exchange (DCE, Dalian; www.dce.com.cn) is designed to raise substantial liquidity for the global trading of the products, said the exchanges, which signed a memorandum of understanding on the launch in 2012.

The DGCX contract, the first ever in the region, “will create a transparent market and new pricing benchmark for the Middle East,” the Dubai exchange said. The contract is sized at 5 t, with prices quoted in USD/t. Leading warehouses in the Jebel Ali and Dubai World Central free zones have been approved for delivering the products.

Reports from the Middle East have it that DGCX has linked one Gulf Cooperation Council (GCC) PP producer to its contract, with first physical deliveries scheduled to be made in July of this year. The exchange is also said to be in talks with a PP producer in Saudi Arabia about backing the contract.

According to Gary Anderson, CEO of DGCX, “the GCC region produces more than 50m t of plastics a year with a significant percentage being exported to the Far East. We believe our plastics futures contract will be a key risk management tool for all participants in the plastics supply chain, including producers, traders, converters and end-users.”

Figures compiled by the Gulf Petrochemicals & Chemicals Association (GPCA, Dubai / United Arab Emirates; www.gpca.org.ae) show that the region’s polymer capacity grew by 13% year-on-year in 2012 to nearly 24m t/y – see Plasteurope.com of 14.01.2014. It is unclear why the numbers quoted by DGCX diverge so sharply. It is clear, however, that demand is increasing, according to GPCA, by 8%. Nearly three-quarters of the 6.6m t/y capacity shown in Plasteurope.com’s Polyglobe database (www.polyglobe.net) is exported, mainly to Asia. Saudi Arabia is the region’s largest producer by far, accounting for 84%.