Argus to launch Singapore bunker fuel derivatives contract on CME

Singapore

OIL price reporting agency Argus is launching a Chicago Mercantile Exchange (CME)-listed Singapore marine fuels future contract next Monday, catering primarily to suppliers and end-users of the fuel.

"This new futures contract will make Singapore even more relevant as a financial trading and physical marine fuels hub, enabling both fuel suppliers and shipowners to hedge their risks effectively," said Alan Bannister, Asia head of business development at Argus.

The CME-listed contract will be the world's first listed delivered bunker fuel derivatives contract, the company said in a statement.

The contract is 100 tonnes in size and is for 380-cSt (centistoke) high-sulphur fuel oil (HSFO). It will settle on the monthly average of Argus HSFO 3.5 per cent delivered bunker assessments.

The bunker assessments are calculated on a volume-weighted average that represents the average price paid by shipowners for that fuel in the spot market on a given day.

"Bunker premiums in Singapore have become increasingly volatile and are expected to remain so because of the IMO 2020 implementation of a global cap on sulphur in marine fuels," the company said.

"This new derivative product can help manage the risk of disconnection between cargo and delivered bunker markets," it added. REUTERS