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SGX launches methanol futures and swap contracts
THE Singapore Exchange (SGX) on Monday launched its methanol futures and swap contracts.
They are meant to help methanol producers, traders and downstream users manage risk and improve price discovery amid growing demand.
The new contracts are cash settled in reference to the S&P Global Platts daily price assessment for methanol.
Named the SGX Platts Methanol CFR China Swap and the SGX Platts Methanol CFR China Futures, they will both be listed with 12 consecutive contract months, starting from Feb 24, 2020.
International traders are seeking more transparency and better tools for price discovery and risk management to hedge methanol prices and exposure, said William Prajogo, SGX petrochemical product manager.
He added that Platts has a “widely accepted” benchmark for the physical market for methanol.
The launch broadens SGX’s other petrochemical products, which serve as offshore tools for forward price discovery. “Across our petrochemical suite, we have seen a 100 per cent compound annual growth rate every year for the past four years and we are expecting this trend to continue this year,” Mr Prajogo said.
Methanol is used predominantly as a feedstock for olefins and formaldehyde production, as well as in direct fuel blending.
Environmental concerns in recent years have led to the user of cleaner products and methanol-to-olefin plants, SGX said. China’s apparent demand for methanol grew by nearly 17 per cent on the year to 69.3 million tonnes last year, on the back of sharp growth in the petrochemical and downstream manufacturing sectors, the bourse operator added.
Shares of SGX were down S$0.06 or 0.7 per cent at S$8.99 as at 3.44pm on Monday, after the announcement.