China approves trading of low-sulfur fuel oil in Pudong

The China Securities Regulatory Commission (CSRC) announced on May 29 that it has approved the trading of low-sulfur fuel oil futures at the Shanghai International Energy Exchange (INE), which will be launched on June 22.

The low-sulfur fuel oil futures will become the third type of commodity futures available to overseas investors through the INE, following the crude oil futures and technically specified rubber (TSR) 20 futures.

Low-sulfur fuel oil is an important fuel for maritime transport. The world’s total consumption of low-sulfur fuel oil is nearly 300 million tons each year, with the Asia-Pacific region being the largest consumer, taking up over 45 percent of the global market share.

The CSRC said that the trading of low-sulfur fuel oil futures and the overseas access will provide domestic and foreign enterprises in related industries with transparent and continual price signals and effective risk management tools, boosting the steady and sound operation of the sector.

It is also expected to give China a greater say in the international market and increase Shanghai's influence in the pricing of low-sulfur fuel oil.

Pudong New Area has been accelerating the opening up of its capital market since 2019, with a number of investment access points for overseas investors being launched, including the Shanghai-London Stock Connect and the China-Japan ETF Connectivity scheme.

Chinabond Pricing Center Co also introduced its Chinese-issued US dollar bond pricing products to the world for the first time in Pudong on June 27, 2019.