Posted on 04/20/2009 5:20:24 AM PDT by thackney
The Shanghai Petroleum Exchange has suspended physical fuel oil trading due to thin trading volumes, a source with the exchange said Monday.
The total traded volume on SPEX since November 8, 2006 (the day of launch) to April 17, 2009 (the last trading day) was recorded at 1.29 million lots, or roughly 2,050 lots/day on average. One lot refers to 10 mt on SPEX.
Fuel oil physical trading on SPEX was launched on a forward basis, with contracts' delivery dates set in forward months.
"Considering the thin trading volume for fuel oil and some petrochemical products, we decided to suspend the operation," the source said.
SPEX's move was widely believed to be part of the preparation for its new trading platform for crude oil, gasoline and gasoil, oil traders said.
SPEX earlier planned to launch spot trade for crude, zero pour gasoil and 93 RON gasoline. However, the launch date has not been finalized as it is still in process of testing the electronic platform and finalizing the trading rules, Platts reported on April 13, 2009.
Unlike futures trading and forward spot trading, the new platform is expected to provide "consecutive spot trading," which allows flexible delivery without time limits.
SPEX may resume spot trading for fuel oil if the new platform attracts enough liquidity, a source with Chinaoil said. Chinaoil is a member with SPEX.
SPEX on Monday also suspended physical forward trading on petrochemical products DOP, styrene, toluene and DEG amid thin trades. However, the exchange has continued with the trading for methanol given its relatively higher trading volume.
The changes mean there is now only one kind of forward physical trading provided on SPEX, which is methanol.
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