The Dalian Commodity Exchange is expected to start trading plastics contracts early in the second half of this year.

The long-range plan for the exchange, which now trades only agricultural futures, is to grow into an all-round bourse.

"Exchange executives have told us it should be no problem to launch the plastics futures within this year," an official at one of the exchange's member brokers said yesterday.

The bourse now trades commodities including corn, soybeans and soybean oil.

Under the plan, the Liaoning Province-based exchange would trade linear low-density polyethylene, or LLDPE, a plastic widely used in applications that require high sealing capacity and mechanical resistance. It's used in plastic films and flexible packaging for food.

The new contract could provide hedging, or risk-protection, to producers, users and traders who want to manage their exposure to global LLDPE price fluctuations.

China is the world's largest polyethylene importer and the second-largest user.

China produced 5.29 million tons of polyethylene in 2005 and imported 5.26 million tons. Within that total, it produced 1.85 million tons of LLDPE and imported 1.7 million tons.

"The situation provides a foundation and offers potential for China to become one of the world's most important plastics futures markets," said Gao Yang, who's a professor at Beijing Technology and Business University.

The London Metal Exchange started trading LLDPE and other plastics futures in 2005. And the Dubai Gold and Commodities Exchange said last month it plans to start trading plastics contracts in the third quarter.

But some traders believe contracts for plastics, which are ultimately derived from oil, may not draw a significant response from the market.