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ICE Launches its First Asia Ethylene Futures Contracts to Hedge Key Component in Manufacturing of Plastics and Packaging
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Intercontinental Exchange (NYSE: ICE) has announced the launch of its ethylene futures contracts on December 13, targeting participants managing exposure to ethylene price risk from the U.S. Gulf Coast to Asia. These cash-settled contracts are based on ICIS price assessments and provide a direct hedge for market participants. With growing demand in the plastics industry, the U.S. is becoming a significant player in the global ethylene market. The new contracts will complement existing ICE offerings and are expected to enhance hedging solutions.
Positive
Launch of ethylene futures contracts on December 13, aimed at managing price risk.
Growing demand for ethylene contracts in the plastics sector.
Expansion of U.S. market influence in global ethylene trading.
Negative
None.
NEW YORK & LONDON--(BUSINESS WIRE)--
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced that it plans to launch its first ethylene futures contracts on December 13.
Designed for participants who need to manage their exposure to ethylene price risk from the U.S. Gulf Coast to Asia, the two cash settled futures contracts are based on ethylene price assessments by ICIS. The ICIS CFR NE (northeast) Asia ethylene assessment and the ICIS CFR SE (southeast) Asia ethylene assessment are quoted on a cost and freight (CFR) basis per metric ton of ethylene for delivery.
“These new contracts will provide a direct hedge for the market to manage its ethylene exposure on the water from the Gulf Coast to Asia,” said J.C. Kneale, Vice President, North American Gas and Power at ICE. “There is tremendous demand from Asia for these contracts given the role ethylene plays in the plastics and packaging manufacturing industry.”
Ethylene is considered to be amongst the most important and widely used petrochemical components. It is one of the key ingredients to make plastic, PVC, polyethylene, and ethylene glycol used in polyester and antifreeze. Polyethylene is estimated to account for more than half of global ethylene demand and is used to make packaging, trash can liners, as well as coating paper and cardboard.
“With its new ethylene export capacity, the US is now a significant player in the global ethylene market. Our petrochemicals team in North America and Asia is immensely pleased to be working with ICE to provide end-to-end hedging solutions in this space,” said Mark Quiner, Head of Petrochemicals at Marex. “We share ICE’s focus on derivatizing petrochemicals in the U.S. as it allows us both to offer our clients international vertical hedging solutions from the well-head all the way to the end of the barrel.”
“Ethylene is the starting point for so many consumer and industrial goods that impact our daily lives,” said Anne-Sophie Purtell, Regional Head of Sales, Greater Asia at ICIS. “The decision to launch the futures contracts shows the increased sophistication of the market. ICIS price assessments are referenced throughout the world and represent an industry reference point. We are delighted that ICE’s Asia ethylene futures contracts will be settled on ICIS price assessments.”
The new ethylene contracts will trade alongside ICE’s existing Gulf Coast ethylene contract, the Ethylene, OPIS PCW Mont Belvieu future (ICE: ETH), and the contracts which hedge the feedstocks to make ethylene including the ICE Ethane, OPIS Mt. Belvieu Non-TET future and option contracts (ICE: ETE).
In addition, ICE plans to launch its first Asia Propylene contracts on January 10, which will be the Propylene ICIS CFR NE Asia Future and the Propylene ICIS CFR SE Asia future. Propylene is the raw material to produce polypropylene, a widely produced commodity plastic, with applications in many household items, clothing, and other consumer products.
About Intercontinental Exchange
Intercontinental Exchange, Inc.(NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate industries to connect our customers to opportunity.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 4, 2021.
