Daily fuel oil trading tops 800,000 tons at Shanghai futures exchange

Three months after it was put on the futures market, insiders say fuel oil is doing well with daily trade averaging at 804,000 tons, or 1.8 billion yuan (220 million US dollars).

Fuel oil trading at Shanghai Futures Exchange totaled 52.29 million tons, or 115.2 billion yuan (14 billion US dollars), in the 65 trading days between August 25 and November 30, according to statistics released Thursday by the Shanghai exchange, one of China's three futures exchanges.

An official with the exchange said it has been a very good start because of the number of transactions, controllable price risks and active participation by companies and investors from home and abroad.

"Price changes over the past months have reflected in time the market demand and supply at home and abroad and been widely accepted by all parties concerned," said Chu Juehai who heads the oil futures team of the Shanghai Futures Exchange.

But Chu said trading has been on the decline in terms of both volume and value lately, following the price drop for refined oil products on the international market. In its peak, Chu said daily trading topped 3.1 million tons in volume and 7 billion yuan (840 million US dollars) in value.

Fuel oil trading has made it possible for Chinese businesses and consumers to avoid some price risks, as China is greatly affected by climbing oil price, says Shan Weiguo, an expert on oil market research at China National Petroleum Corp (CNPC), the country's largest oil producer.

Fuel oil is one of the three new futures products introduced in China this year. The country also launched cotton futures at Zhengzhou Commodity Exchange in central Henan Province in June, and corn futures at Dalian Commodity Exchange in northeast China's Liaoning Province in September.

Insiders expect the bulk products to bring about surges in investment and transactions on China's futures market that has long been hampered by a lack of variety.