Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Asia Pacific Exchange starts first 380 cst fuel oil futures contract

0fc21032a95d5fceaa9201b3ea5e5fe3
Singapore-based Asia Pacific Exchange (APEX) has launched its first fuel oil futures contract for trading with an aim of creating a platform for energy industries and financial institutions to hedge and invest in the fuel oil market.

The initial trade is for 380 cst fuel in small contract size of 10 metric tonnes to allow all market participants to participate in the trading.. The contract is US dollar denominated.

APEX said the contract is expected to provide price transparency for the fuel oil market, as the contract is continuously traded in the market. Trading hours cover Platts Singapore, Shanghai Futures Exchange (SHFE) and Intercontinental Exchange (ICE), connecting Singapore, Shanghai, European and American markets.

“The contract is settled through physical delivery, via the use of APEX Fuel Oil Warehouse Receipts (AFOWR). This unique method of physical delivery is the first in Singapore, and is expected to bring increased convenience to the marine fuel oil market,” APEX stated.

“Participants can choose to load-in their fuel oil to APEX Approved Warehouses, where they can store or sell their products to potential buyers. The unique methodology ensures that the product conform to the specifications during physical delivery, reducing the risks of low quality products.”

Read more: First Singapore 0.5% low sulphur fuel futures contract traded at $200 spread

APEX highlighted that the largely volatile marine fuel oil prices have fluctuated up to 100%, urging associated industries to hedge the risk of adverse price movements.

“Currently, there are limited hedging tools in the local market for marine fuel oil, with most local participants relying on Over-The-Counter (OTC) Market or hedging tools from paper markets, active participants using the Platts market.

“In addition, many Chinese participants utilise the SHFE contract to hedge their risks. Despite the presence of these markets, there remains several constraints such as exchange rate fluctuations and large contract denominations,” it said.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish