According to an article published in PR Newswire, the global commodity price reporting and news agency Argus and the Asia Pacific Exchange (APEX) has recently signed an agreement licensing the use of the Argus Bunker Index (ABI) Singapore LSFO 0.5% as the settlement price for a proposed new derivatives contract.
Managing Price Risk
The contract can be used by oil traders, bunker fuel suppliers and shipowners to manage their price risks related to the new low-sulphur fuel oil (LSFO) required to comply with the 0.5% sulphur cap being introduced by the International Maritime Organisation in January 2020 (IMO 2020).
How were the assessments done?
ABI Singapore assessments were launched in June last year and are calculated using a volume-weighted average of fixed price delivered-to-ship bunker transactions between suppliers and shipowners reported to Argus by 7pm each day.
- More than 40 companies have voluntarily contributed their trade data over the previous year and typically more than 20 deals are submitted each day, making it a robust price assessment process.
- The LSFO 0.5%S index represents the price of bunker fuel delivered within 4-12 days from the trade date, for volumes between 500t and 3,000t, with viscosity of less than 380cst and sulphur below 0.5%.
- The launch date and specifications for the APEX contract will be announced in due course, subject to the completion of the necessary regulatory processes.
- ABI Singapore assessments are available and published in the Argus Marine Fuels and the Argus Asia-Pacific Products reports.
APEX-Argus Partnership
“APEX is looking forward to partnering with Argus,” APEX chief executive Eugene Zhu said. “Since the launch of the High Sulphur Fuel Oil Futures Contract on 11 April 2019, the average daily trading volume and open interest have been increasing steadily. With the upcoming IMO 2020 regulations, the energy and shipping industries are expected to face greater challenges. To better fulfil market demands, APEX is working with Argus in our development of a Low Sulphur Fuel Oil Futures Contract, which will provide a new tool for market participants in order to hedge and manage their risks.”
“Argus is pleased to be working with our friends at APEX to provide this valuable trading and hedging instrument for use by the marine fuels industry,” Argus Media chairman and chief executive Adrian Binks said. “The bunker market in Singapore is already experiencing extreme volatility as we approach IMO 2020 and using ABI Singapore LSFO 0.5%S as a reference price in physical contracts and as a derivative trading instrument would help companies manage their price risk.”
About APEX
Asia Pacific Exchange-APEX, is an international derivatives exchange and clearing house approved by the Monetary Authority of Singapore, the third exchange with the “Approved Exchange” and “Approved Clearing House” licenses in Singapore. APEX’s business scope covers futures and options contracts covering both commodity and financial derivatives products, including derivative products in the asset classes of agriculture, energy, petrochemical, metal, foreign exchange, interest rates, bond and stock indices.
APEX officially launched its first product on 25 May 2018. Currently, the listed products include 380cst High Sulphur Fuel Oil Futures, Palm Olein Futures, Crude Palm Oil Futures and USD/CNH Futures.
About Argus Media
Argus is an independent media organisation with almost 1,000 staff. It is headquartered in London and has 23 offices in the world’s principal commodity trading and production centres. Argus produces price assessments and analysis of international energy and other commodity markets, and offers bespoke consulting services and industry-leading conferences.
For further information
APEX
Bella Xu, +65 6914 2832, bella.xu@asiapacificex.com
Vincent Wang, + 69142859, vincent.wangjj@asiapacificex.com
Argus Media
London: Seana Lanigan, +44 20 7780 4272, seana.lanigan@argusmedia.com
Houston: Melanie Cruthirds, +1 713 968 0000, melanie.cruthirds@argusmedia.com
Singapore: Tomoko Hashimoto, +65 6496 9960, tomoko.hashimoto@argusmedia.com
Moscow: Alexey Komarov, +7 495 933 75 71, alexey.komarov@argusmedia.com
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Source: PR Newswire
