Futures contract starts Monday. File image/Pixabay.
The marine fuel futures contract that launches today on the Shanghai International Energy Exchange is likely to attract strong interest, despite weakened ship fuel demand amid the coronavirus pandemic.
The new low-sulfur fuel oil contract is the latest commodity futures product - and second oil contract after Shanghai crude - open to foreign investment, according to Reuters.
Citing market sources, the report said that with few competitors, the contract stands a fair chance to grow into an Asian benchmark for shipping fuel, especially as about 20 Chinese refineries are newly equipped to produce the low-sulfur fuel.
The contract could also further Beijing's ambition to build a bunkering hub in eastern China's Zhoushan port to challenge Singapore as the region's top spot for bunkers.
"The listing is hugely attractive for physical enterprises, institutional investors and retail investors," Xu Lei, a manager at Xiandai Resource Co, an eastern China trading company planning to trade the contract, was quoted as saying.
Senior managers at state refiners and global trading firms told the news agency that they are also keen to trade the contract and will monitor the market from Monday.