Shanghai INE inks agreement with PetroChina for LSFO futures overseas delivery

The Shanghai International Energy Exchange (INE) on Thursday (26 November) signed an agreement with PetroChina International Co Ltd for the overseas delivery for its low sulphur fuel oil (LSFO) futures contract, reported Reuters

The partnership is a consensus on a first overseas delivery for the bunker fuel as an “important foundation” towards China’s futures delivery “going global”, said the INE. 

This would be the first time a Chinese futures contract would be deliverable outside of China, which could boost the liquidity and increase the pricing influence of the low-sulphur fuel oil contract.

The partnership marks the first time a futures contract in China can be deliverable outside of China, and would boost liquidity and flexibility for the contracts, as well as help to influence pricing for bunker fuel. 

While the INE statement did not name the specific storage sites or delivery points, it cited that Petrochina had distribution centres for bunker fuel oil Zhoushan, as well as overseas in Singapore and the UAE.

The Shanghai INE gained approval from the China Securities Regulatory Commission to list its LSFO futures contracts in June this year, and at that time the Commission specified the fuel in contracts open for trade must be of domestic origin.

Related: Shanghai INE mulls Singapore port as delivery location for LSFO futures contracts
Related: Shanghai International Energy Exchange confirms listing date of LSFO futures contracts
Related: China Securities Regulatory Commission approves INE’s LSFO futures contracts
Related: Shanghai INE VLSFO futures project enters milestone, trading simulations to start in June

Photo credit: Edward-he
Published: 27 November, 2020