(Yicai Global) July 17 -- The Shanghai Futures Exchange listed 380-centistoke bonded fuel oil futures contract on Monday to remedy the absence of a mechanism for it in China. Foreigners will soon be able to invest in the newly-listed commodity.  

The main contract for FU1901 closed at CNY2,994 (USD450) per ton on the first day of trading, up 0.2 percent from the benchmark price the exchange set.

The new contracts will be traded based on net price, with bonded storage delivery. Daily price fluctuations will be capped at plus or minus six percent relative to the closing price on the previous trading day, with the trading margin 10 percent of contract value to curb price volatility.

As the second energy futures product introduced by the SHFE after crude oil, the 380-centistoke bonded fuel oil contract will be open to foreign investors after market operations stabilize, noted Lu Wenshan the exchange's chief supervisor.

As foreign trade continues to grow, 380-centistoke bunker fuel oil, a key supply for ocean shipping, has become a mainstream product in today's market.

Companies currently participating in the domestic bonded fuel oil market fall into three groups, upstream businesses consisting of oil importers and blending, trade and warehousing companies represented by PetroChina, Sinopec and Chimbusco, midstream ship fueling service providers, and oceanic shipping companies such as Cosco in the downstream.

The price of these futures objectively reflects supply and demand on the Chinese market, providing the basis for ultimately forming the benchmark price in trade and therefore a 'Chinese standard' that is widely recognized among market participants, a pundit advised. 

A centistoke is a centimeter-gram-second unit of kinematic viscosity, which is 1/100 (0.01) of a stoke -- a centimeter-gram-second unit of kinematic viscosity.

Editor: Ben Armour