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.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
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.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
DigitalBridge-backed Vantage said to weigh Hong Kong data centres sale
Vietnam delays launch of new stock trading system
Tesla’s plan for affordable cars takes page from Detroit rivals
Meituan to debut in Riyadh as expansion beyond China quickens
Mapletree Industrial Trust to distribute S$13 million of divestment gains over next 4 quarters
K-pop agency Hybe’s internal strife wipes out 1.2 trillion won