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China Futures: INE Low Sulphur Fuel Oil (LSFO) Futures

Did you know that 90% of global trade is fullfilled via sea logistics? This makes Marine fuel a key component affecting world trade. The Maritime industry used to rely on high sulphur fuel oil, but since 2020, the International Maritime Organization (IMO) 2020 policy, had been a game changer in the type of fuel used. Read more: 

 

What is Low Sulphur Fuel Oil (LSFO)?

  • LSFO is a type of refined oil principally used in oil refining and chemical, transport, construction, metallurgy industries and Marine fuel. By sulfur content, marine fuel can be classified into grades I, II, and III; corresponding to a maximum sulfur content of 3.50%, 0.50%, and 0.10% m/m, respectively.
  • Important as a Marine fuel (which fuels 90% of global trade).
  • Since 2020, LSFO has become a mainstream product for Marine fuel; since the International Maritime Organization (IMO) requires a sulfur cap of 0.50% m/m on fuel oil used by ships worldwide (IMO2020). If you are interested to read more about the IMO 2020 policy, click here.

LSFO Demand and Supply

  • Global annual production is about 500 million metric tons.
  • Global consumption recent years reached 280 million metric tons; with Asia-Pacific region accounting for 45% of the global total.
  • Fluctuation of international crude oil price depends largely on factors such as demand by shipping market, Supply and demand of the Singapore market, Exchange rate, environmental policies, political situations. Before there is an active and effective benchmark price for low sulfur fuel oil, the price for 10 ppm diesel will be used as the benchmark.

Marine Fuel oil is one of the most market-driven petroleum and petroleum products in China. China’s marine fuel market can be divided into the domestic-voyage segment and the bonded fuel segment. Supply for the former segment mainly comes from domestic refineries and blending companies, while that for the latter comes almost exclusively from import.

Potential of the INE (Shanghai International Energy Exchange) LSFO Futures Contract: 

  • This contract features marine fuel meeting stricter international emissions rules and the second oil contract after Shanghai crude – open to foreign investment.
  • With few competitors, the contract potentially can grow into an Asian benchmark for shipping fuel, especially as Chinese refineries are equipped to produce the low-sulfur fuel.
  • This contract provides the market a more effective tool to hedge risks as the global shipping industry transforms from high to low-sulphur fuel.

Do not miss out on the opportunities in the liberalisation of China’s Capital Markets. Contact us today.

To learn how to participate in the INE LSFO Futures: Click here

For Contract Specifications of the INE LSFO: Click here 

Orient Futures Singapore is an Overseas Intermediary of INE (Shanghai International Energy Exchange) which means our clients get direct access to the China markets. Partner with Orient Futures Singapore and let us help you navigate into China’s Capital Markets.Do not miss out on the opportunities in the liberalisation of China’s Capital Markets. Contact us today.

Sources and PC:

  1. Shanghai International Energy Exchange
  2. INE Low Sulphur Fuel Oil Futures Handbook for Trading 2020

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Orient Futures International (Singapore) Pte. Ltd. (“OFIS”) (UEN No. 201831776Z), hold a capital markets services licence (CMS100869) from the Monetary Authority of Singapore for dealing in capital market products such as futures/derivatives contracts, and spot foreign exchange contracts for the purposes of leveraged foreign exchange trading, and is an Exempt Financial Adviser. For more information about OFIS, please check the MAS Financial Institutions Directory by clicking here.

All content, materials, information, data, statistics, features, research, documents or reports available on OFIS’ website (the “Content”) are governed by the Terms of Use, which you are deemed to have consented and agreed to by accessing, using or downloading any Content. For more information on how OFIS handles your personal information, please refer to the Privacy Policy section in the Terms of Use.

You agree to access and accept all Content available on OFIS’ website on an “as-is” and “as available” basis. You agree that OFIS shall not have any responsibility or liability arising out of or in connection with, and you agree to waive the right to bring any claims or raise any complaints against OFIS in respect of any Content available on our website. OFIS shall also not be liable for any damage, loss or liability of any kind (whether actual, anticipated, consequential, special, economic or otherwise) caused as a result (direct or indirect) of the use of, or inability to access or use, the website, including but not limited to any damage, loss or liability suffered as a result of your reliance on the Content or our website.

All Content available on OFIS’ website are general in nature and have been prepared without any consideration of your investment objectives, financial situations or needs. You should consider the appropriateness of any Content available on our website having regard to your personal circumstances before making any investment decisions. You should take into account your investment objectives and financial situation and seek advice from an independent financial advisor under a separate engagement if necessary. For any Content on OFIS’ website which contains communications relating to investment products or financial services, the following disclaimer would apply: “This advertisement has not been reviewed by the Monetary Authority of Singapore.”

Marcus Goi Chin Poh

Managing Director and Chief Executive Officer
Orient Futures International (Singapore)

Marcus Goi is the Managing Director and CEO of Orient Futures International (Singapore) Pte Ltd (OFIS).

As CEO, Marcus drives OFIS’s global expansion with a disruptive approach, harnessing advanced technologies like Artificial Intelligence, Machine Learning, and Smart Data to transform brokerage services.

Before joining OFIS, Marcus was Head of Commercial and Global Sales at United Overseas Bank Bullion and Futures (“UOBBF”), where he played a key role in shaping brokerage business development and global sales strategies. A respected leader in the capital markets, he led the creation of UOB’s low-latency global trading network and solutions, which attracted a significant client base and high trading volumes.

With over two decades in the financial services and capital markets industry, Marcus is renowned for his expertise in exchange-traded derivatives, OTC clearing, and leveraged FX, and is recognized for his successful track record in driving industry innovation and transformation.