- China’s Shanghai INE had signed an agreement with PetroChina to cooperate on the overseas delivery for its LSFO futures contract ILUF1.
- Both parties have reached a consensus on cross-border overseas delivery for the marine oil.
- This would be the first time a Chinese futures contract would be deliverable outside of China, which could boost the liquidity and increase the pricing influence.
The Shanghai International Energy Exchange (INE) has signed an agreement with PetroChina International for cooperation on overseas delivery for its low-sulphur fuel oil (LSFO) futures contract ILUF1, reports Nasdaq.
Overseas LSFO delivery
According to Reuters, INE and PetroChina have reached a consensus on the cross-border overseas delivery for LSFO, marking the first time a Chinese futures contract would be deliverable outside of China.
This could increase the liquidity and pricing influence of ILUF1. INE said that the deal is an ‘important foundation’ for China’s first futures delivery ‘going global.’
ILUF1 contract
In the statement seen by Reute rs, INE did not say which storage sites or delivery points would be used, but mentioned PetroChina’s bonded marine fuel oil distribution centre in Zhoushan, China, as well as Singapore and the UAE.
Sources told that INE was considering using sites in Singapore as a delivery point for its low-sulphur fuel oil futures contract.
- The ILUF1 contract was launched in June following the introduction of the IMO 2020 regulations on sulphur content in shipping fuels.
- The contract enabling overseas delivery will help China build a regional bunkering hub in Zhoushan, to rival Singapore.
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Source: Nasdaq
