BEIJING (Reuters) - China aims to launch a bonded low-sulfur bunker fuel oil contract that will allow foreign investors to participate in trading by the end of 2019, the Shanghai Futures Exchange (ShFE) said on Thursday.
A 0.5 percent sulfur content cap in shipping fuel set by the International Maritime Organisation (IMO) comes into effect in 2020.
“The contract will help expand China’s pricing influence in global bunker fuel oil market and help China to improve its maritime transportation capacity,” ShFe Chairman Jiang Yan said in a statement.
“Bunker fuel markets will see bigger opportunities and challenges in 2020. China may reverse the current situation of fully relying on imports on high-sulfur bunker fuel oil and become the world’s biggest low-sulfur heavy bunker fuel oil supply center,” Jiang said.
China National Petroleum Corporation (CNPC) has planned a low-sulfur fuel oil supply of 4 million tonnes a year, a senior company executive said. The first batch of the fuel was dispatched from its Dalian Petrochemical plant in early June.
Sinopec Group, another Chinese oil giant, said last year it would start supplying IMO 2020 standard bunker fuel in 2019 and all of its supplies would meet IMO 2020 standard by Jan. 1.
The low-sulfur fuel oil contract would be China’s second bonded oil futures followed by crude oil futures <0#ISC:> on the Shanghai International Energy Exchange (INE), a ShFE subsidiary.
INE has recorded 103 million lots of trade in crude oil contracts since its launch in March 2018 till the end of June this year.
Reporting by Muyu Xu and Aizhu Chen