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Mon 20 May 2013, 21:04 GMT

SHFE could trade 380-cst bonded fuel oil futures


Futures exchange to look into the feasibility of launching a platform for the trade of 380-cst bonded fuel oil futures.

Shanghai Futures Exchange (SHFE) is planning to launch a platform for the trade of 380-centistoke (cst) bonded fuel oil futures, ICIS reports.

An unnamed source at SHFE is said to have stated that Guangzhou Twinace Petroleum & Chemicals Co., Ltd. - a petroleum and chemical trading company based in Guangzhou - will be involved in a feasibility research project that will aim to calculate the spot market capacity of 380-cst bonded fuel oil in China and to also select tank farm delivery points.

The SHFE source added that market participants at the beginning of the process would only be Chinese companies because there would be "some barriers" for international market players, adding that "it will take some time to tackle these barriers".

The idea of setting up a platform for trading bonded fuel oil was initially raised at a conference held by SHFE's energy commission in 2012, a member of the commission is quoted as saying.

The bonded 380-cst fuel oil trading concept was also triggered by the "stagnant" internal trade of 180-cst fuel oil futures, the source said, adding that if the 380-cst fuel oil platform became an attractive proposition for international market players, China would have "a louder voice" in the pricing of fuel oil and its fuel oil prices would "no longer be affected by Singapore".

SHFE's trading rules for 380-cst bonded fuel oil may be similar with those of bitumen and crude, added the unnamed source.

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