China planning to open fuel oil futures exchange in Shanghai

Jan. 10, 2002
China is considering opening a fuel oil futures exchange in Shanghai in the second half of this year to allow the market to react more efficiently to global oil price fluctuations.

By an OGJ Online Correspondent

BEIJING, Jan. 10 -- China is considering opening a fuel oil futures exchange in Shanghai in the second half of this year to allow the market to react more efficiently to global oil price fluctuations.

The Shanghai Futures Exchange applied to the China Securities Regulatory Commission to launch the exchange. Five other government ministries and the State Council, China's highest governing body, must approve the application.

Approval is expected in the first half of this year.

China ended oil trading on the Beijing and Shanghai petroleum exchanges in 1995 because, the government said, futures trading was too speculative and easily manipulated.

It said now that China has joined the World Trade Organization, oil trading and pricing should be more transparent and reflect market fundamentals and international standards.

Fuel oil is one of the few oil products China allows to be imported. In the first 11 months of last year, China imported 16.08 million tonnes of fuel oil, up 56% on year, while domestic production during the period fell by 9.8% to 16.75 million tonnes.

At the end of last year, the government issued fuel oil import licenses to 52 Chinese companies.