UPDATE 2-LME says H1 volume up, to end plastics floor trade
* LME plastics to be removed from floor after consultation
* "Full steam ahead" on minors
(Recasts lead, adds detail/comment)
By Michael Taylor and Pratima Desai
LONDON, July 10 (Reuters) - Plastics contracts are to be scrapped from the London Metal Exchange's trading floor because of low volumes, its chief executive said on Friday, curtailing an experiment begun with their launch in 2005.
But the LME also said overall first half year trading volumes across the range of contracts traded on the exchange were better-than-expected -- defying its own predictions of a slump due to the economic downturn.
Speaking at a briefing, LME Chief Executive Martin Abbott said the withdrawal of plastics floor trading would take place in the first part of next year. "Plastics is coming off the floor ... they are not trading on the floor basically."
The LME offers eight plastics futures contracts for polypropylene (PP) and linear low density polyethylene (LL). Plastics are petro-chemical products, and are often heavily influenced by energy price moves.
"It doesn't surprise me because there was nothing going through on the floor," said Mo Ahmadzadeh, president of Mitsui Bussan Commodities. "There is no official floor volume ... I would assume 90 percent was done online."
"There is no point having a floor session if no one is doing anything. They can always bring it back to the floor."
The LME came under fire from some quarters for expanding into plastics from its traditional metals markets, with low volumes and lacklustre support from the industry. In a statement earlier on Friday, the LME said its overall volumes rose 1.8 percent to more than 55.18 million lots from the same period a year ago. The exchange had budgeted for a 10 percent fall in volume, due to the economic downturn.
Daily average volumes in the first half rose 2.6 percent to 445,041 lots from the same period last year, the LME said.
Among the contracts showing the highest volume growth in 2009, tin futures and options volume grew 71.6 percent to 1,316,440 lots traded in the first six months of 2009, the LME said in a statement.
Nickel volumes grew 19.4 percent to 3,085,672 lots, copper grade A grew 3.3 percent to 13,570,101 lots over the same period, while for primary aluminium, the exchange's largest contract, volumes were down 2.8 percent to 25,160,501 lots.
Abbott said the launch of cobalt and molybdenum contracts, should go ahead in February 2010.
"There is even talk we could do them earlier but it doesn't make sense to the market because then we'd be asking the market to rush to get them done," Abbott added.
Abbott also said there were no plans to launch any new products, but that they were constantly looking at new options.
He also said the exchange had received no formal complaints about tin, which has been in focus throughout the last few weeks because of the scale of long positions compared with the amount of available metal stored in LME warehouses. [ID:nL6246168]
"There has been a lot of coverage recently about the tin market," he said. "We monitor all markets all the time and we never make statements ... Any statement we might make, would in itself become a leading piece of information.
On steel futures contracts, launched in February 2008, Abbott said the LME will step up the amount of time its steel team spends in Asia.
"We will be doing a lot more marketing work out there," Abbott said, adding that the Far East contract was not performing anywhere near as well as the Mediterranean.
LME contracts cover steel billet for delivery in the Mediterranean and Far East. [ID:nLP616629]
"It is frankly, just logistically more difficult for us to get around the players in the Far East and our member base doesn't have quite the same footprint."
(Editing by Keiron Henderson)