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Titan Petrochemicals Group Limited has declared its full support for the groundbreaking project unveiled by the Hong Kong Mercantile Exchange (HKMEx) to establish a commodities exchange in Hong Kong.

The exchange, which is scheduled to launch in the first quarter of 2009, is set to start trading US dollar Chinese fuel oil contracts. The fuel oil, to be stored along southern China's border, will be available for delivery on the mainland or overseas.

HKMEx aims to provide an efficient and transparent pricing platform for end-users and the global trading community to trade tailor-made contracts in China and across the region. Backers say the exchange will bridge the international commodities markets with China.

Titan’s bonded petrochemical storage facilities in China are expected to be designated HKMEx physical delivery points, according to the company. Over the past two years, Titan has taken an active part in planning and preparing for the establishment of HKMEx, including the delivery arrangements for oil products under futures contracts.

Mr. Tsoi Tin Chun, Titan Group Chairman and Chief Executive, said: “The successful launch of HKMEx will further consolidate Hong Kong’s status as an international financial center. It will also raise Asia’s commodity trade market to an international level, as well as strengthen the region’s influence and position in the international commodities markets.

“This strategic project will be another milestone in the development of Titan, allowing the Group to participate at a higher level in the development of an Asian petrochemical market, especially in regards to China. We will continue to give full support to the establishment of HKMEx through our extensive commercial network in the international oil business. More significantly, as designated physical delivery points, the Group’s modern bonded petrochemical terminals in China, which are built and operated to international standards, can provide the essential efficient infrastructure for the exchange,” Mr. Tsoi added.

“We believe that HKMEx is well placed to boost Hong Kong’s international position in energy commodities, both physical and futures trading. A commodities trading center will not only strengthen Hong Kong’s economy, it will also significantly enhance Hong Kong’s international status, attracting global oil producers and international oil traders to register and trade in Hong Kong. This, in turn, will strengthen the physical and futures markets, expand the financial market, and bring about greater prosperity to the region.”

“At the same time, it will further attract talents from various disciplines and countries, thus raising the quality and competitiveness of the talent pool in Hong Kong. It will also encourage global corporations to increase storage of energy commodities in Asia, and in particular, China. The entrepot trade in petrochemicals from Hong Kong to North-east Asia will encourage global players to trade on the HKMEx, which will result in the establishment of an international petrochemical logistics hub with Hong Kong as a trading junction, and logistics centers in Hong Kong and mainland China.”

Titan’s storage facilities in China are located in Nansha (Guangdong), Quanzhou (Fujian) and Yangshan (Shanghai). The terminal in Nansha is being constructed in three phases, with overall capacity amounting to 1.8 million m3. Phase 1 has been operational since late 2006, storing fuel oil, with a capacity of 410,000 m3. Phase 2 with 305,300 m3 of capacity, including 180,000 m3 for oil products and 125,300 m3 for chemicals, will come on stream by end of 2008. Phase one of the Fujian Petrochemical Terminal is also operational. In addition, the Shanghai Yangshan Terminal Phase 1 comprising 420,000 m3 of fuel oil storage will be operational by the third quarter of 2008. By the end of 2008, the Group’s total storage capacity in China will reach 1.2 million m3.

The remaining phases of the Nansha, Fujian, and Yangshan terminals are planned for completion in 2010 and 2011.