Liquefied petroleum gas futures and options were officially listed on the Dalian Commodity Exchange on Monday after getting the approval of the China Securities Regulatory Commission. The listing will be China's first-ever gas energy derivatives that lists futures and options simultaneously.
According to CSRC vice-chairman, Fang Xinghai, more than 8,600 clients had participated in the first day of trading for the LPG futures and options. During trading on Monday, trading volume reached a maximum of 96,400 unilateral trades.
Fang mentioned in a statement that the listing of the LPG futures and options is a milestone measure for the country's futures market. He hopes that the listing will be the start of a drive towards green development and the enhancement of the country's energy price formation mechanism.
The exchange commission is hoping to see other futures and options for other energy resources as the country moves forward in the construction of a system for domestic energy futures represented by resources such as oil, gas, and coal. Other greener energy sources will hopefully follow and be available to trade on the markets.
LPG, a by-product of the crude oil refining process, is one of the cleanest types of energy sources that are abundantly available. The resource is also versatile and is commonly used to produce petrochemical products and materials for a wide array of applications.
Trading for the particular listing is expected to ramp up following China's removal of punitive tariffs on LPG imports from the United States. Chinese importers are now restarting their buying spree of US-sources LPG, booking thousands of tons of the fuel worth millions of dollars. China effectively removed the 25 percent tariffs it had imposed on the fuel, with newly imported LPG being subject only to a 1 percent import duty.
China is currently one of the world's largest importer and exporters of LPG. It is also the world's third-largest producer and the world's largest consumer. The choice to have the new LPG futures and options listed in the city of Dalian is only fitting given that it houses the largest domestic oil refining base and LPG production facilities in the country.
Dalian city acting mayor, Chen Shaowang, that the city will continue to support the exchange and its goals of promoting the development of world-class exchanges. Since the exchange's establishment in 1993, the Dalian Commodity Exchange has listed a total of 20 futures and 4 options that are available to trade.
The approval of the energy futures and options is seen by the exchange as a major milestone as it expands into other listing varieties. The Dalian Commodity Exchange hopes to include options in various other sectors, including those based on the energy and shipping sectors.
