Singapore Exchange to launch petrochemical derivatives

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SINGAPORE (Nov 21): Singapore Exchange said on Friday it will launch five petrochemical swaps and futures in the next two months to meet rising demand for risk management in the industry.

The exchange will start swaps and futures contracts for paraxylene (PX) delivered to China on Dec. 2 and another four polyolefins contracts on Jan. 19, it said in a statement.

The polyolefins contracts are for linear low density polyethylene (LLDPE) and for polypropylene (PP) flat yarn delivered to China and Southeast Asia, SGX said.

"Given the volatile nature of the market, these new swaps and futures contracts aim to provide a more effective hedging instrument for petrochemical industry participants in the Asia PX, PP and PE physical markets," the exchange said.

The PX, PP and polyethylene (PE) markets are estimated to have grown to 45 million tonnes, 23 million tonnes and 35 million tonnes, respectively, with China consuming the most, SGX added.

ICIS will be the index provider for the polyolefin contracts, SGX said, while the PX contract will be cash settled against the Platts index.