Fastmarkets

Why Spot-Settled Futures Contract Work

The video announces an industry‑first partnership between Norexco and FastMarkets to introduce spot‑settled futures contracts for the European pulp market. The collaboration aims to give producers and traders a more precise tool for hedging price risk in a sector traditionally reliant on less granular instruments. Norexco, a regulated exchange operating since 2015, will offer the contracts through its electronic trading system and a dedicated market service desk. Unlike earlier futures that settled against FastMarkets’ PICS index reflecting gross market prices, the new spot contracts settle directly against the same benchmark, delivering tighter alignment with actual spot prices and therefore greater pricing accuracy. The announcement emphasizes that market participants can now trade these contracts with “much greater accuracy,” a claim underscored by the use of the PICS indices for settlement. The video directs viewers to Norexco’s website and FastMarkets’ pulp section for further details, signalling a push for rapid adoption. If widely embraced, the contracts could deepen liquidity, lower hedging costs, and improve risk‑management practices for pulp producers, converters, and traders, potentially setting a new standard for commodity futures in the European market.