Sweden 's OM to open London forest products bourse .
STOCKHOLM 1996-08-29
Swedish options and derivatives exchange OM Gruppen AB said on Thursday it would open an electronic bourse for forest industry products in London in the first half of 1997 .
" Together with subsidiaries OMLX , the London Securities & Derivatives Exchange and OM Stockholm , OM Gruppen will open an international electronic bourse for forest products in the first half of 1997 , " OM Gruppen said in a statement .
The first commodity to be traded on the PULPEX bourse will be pulp , but OM said trade would be extended to include products such as timber , recycled paper and other paper qualities .
" Through the establishment of PULPEX , London will have a commodities bourse for forest products which complements existing bourses for oil , metals and ' softs ' ( coffee , sugar and cocoa ) , " OM said .
PULPEX was the result of a three-year project run in cooperation between OM and representatives of the forest industry , the company said .
Huge swings in the price of pulp over the past few years have made pulp producers ' profitability unpredictable , and made investing in new production capacity a risky business .
" Without the ability to hedge prices , changes in the world market price for pulp has had an immediate impact on players ' profitability , " OM said .
It said global production of pulp amounted to around 200 million tonnes per year , of which around 20 percent or 40 million tonnes was sold on the spot market .
At current prices , the value of this production was around $ 25 billion .
PULPEX will be both a marketplace and a clearing house , OM said , adding that the British Securities and Investments Board had been informed of OM 's plans .
PULPEX 's clearing operation will be covered by the parent company guarantee issued by OM Gruppen to its wholly-owned bourses and clearing organisations .
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