Petrochem Plans Spot Contracts Market

Titan Petrochemical Group Ltd, China's largest oil-supertanker owner, plans to set up a market to trade spot petrochemical contracts in the country's south this year, said the head of Guangzhou Huanan Petrochemicals Exchange.

Trading will start with fuel oil and liquid chemical products, Heilam Chen, the exchange's general manager, said in a telephone interview on Wednesday.

The market would be China's third oil exchange. Dalian Petroleum Exchange started trading oil-product spot contracts on July 25, almost a year after the Shanghai Petroleum Exchange commenced operations.

The bourses aim to set benchmark prices for energy commodities in China, the world's largest oil consumer after the United States.
'We are asking traders for opinions regarding the trading methods,' said Mr Chen said.

The exchange proposes trading petrochemical contracts through the Internet, he added.

Hong Kong-based Titan Petrochemical will own 70 per cent of the exchange, while Guangzhou-based Nansha Assets Management Corp will own the rest, Mr Chen said.

Shanghai Petroleum Exchange started trading in toluene, styrene and diethylene glycol, used in the production of plastics, in March, expanding from the fuel oil contracts it started offering last August.

Dalian Petroleum Exchange, formed from the reorganisation of Dalian Free-Trade Zone Petrochemical Exchange in northern China, will mainly trade fuel oil, bitumen and chemical products, Shanghai Securities News said on July 26, citing general manager Zhou Peiliang.

China liberalised trading in fuel oil, chemicals and liquefied petroleum gas in 2001, allowing prices to be determined by supply and demand.
The government sets crude oil, gasoline, diesel and jet fuel prices to curb their impact on inflation in the world's most populous nation.