CME to use PetroChem Wire’s index to settle new ethylene contracts

The Chicago Mercantile Exchange (CME) Group will settle its new ethylene futures contract against the PetroChem Wire’s (PCW) ethylene index, a reflection of its belief in the quality and accuracy of PCW’s figures. On June 1, CME Group launched clearing services for a new Mont Belvieu ethylene futures contract, scheduled to begin June 14 for trade date June 15. The clearing services will be available through CME’s ClearPort, a system open to over the counter (OTC) market participants, which mitigates counterparty risk and provides capital efficiencies across asset classes. The contracts are listed for trading by NYMEX through CME ClearPort, and are subject to NYMEX rules and regulations.

CME Group’s new Mont Belvieu ethylene futures contract, which launches June 14, will be listed by NYMEX and utilize PetroChem Wire’s ethylene index for settlement.

The commodity code for the new contract will be 1F, with contracts listed for up to 24 consecutive months beginning with the July 2009 contract. Settled against PCW’s ethylene index, CME Group says the contract will allow a large segment of the petrochemical market to hedge risk.

Ethylene is a key monomer for a variety of plastics, including the first and second most widely used materials—polyethylene and polypropylene. The vast majority of ethylene is used to produce polyethylene, with much of the remainder applied in ethylbenzene, ethylene oxide, and ethylene dichloride, the precursors to styrenes, polyesters, and vinyls, respectively.

PCW issues a daily publication quoting active spot markets with commentary for natural gas liquids (NGLs) like ethane and propane; olefins (ethylene and propylene); and polyolefins (polyethylene and polypropylene), partnering with the spot-trading platform, The Plastics Exchange (TPE), on the polymers. You can find TPE and PCW's weekly summary of spot and contract pricing for polyolefins and polystyrene on PlasticsToday.com and each week in NewsFeed. TPE, PCW, and the CME Group will be at adjacent locations at NPE2009 (June 22-26, McCormick Place, Chicago) in Booth W131038. —[email protected]