On September 7, 2018, Shanghai International Energy Exchange (hereinafter referred to as INE), a subsidiary of Shanghai Futures Exchange, successfully completed the delivery of the crude oil futures contract SC1809, with a total delivery volume of 601,000 barrels of crude oil, transaction amount of RMB 293 million (unilateral), and settlement price of RMB 488.2/barrel, up 10.95% from the opening price of RMB 440.0/barrel on March 26. The first batch of crude oil used for futures delivery was distributed in three designated delivery warehouses, which are Dalian CNPC Bonded Warehouse, Cezidao Oil Depot of Sinopec Group Petroleum Commercial Reserve Co., Ltd. Zhoushan Branch, and Bonded Warehouse of PetroChina Fuel Oil Co., Ltd. Zhanjiang Branch.
For the SC1809 Contract, there were 110 trading days from listing to delisting. According to unilateral statistics, the total deals reached 8,982,500, the total turnover reached RMB 4.32 trillion. On average, the daily deals reached 81,700, and the daily turnover was RMB 39.318 billion. August 31 is the last trading day of the SC1809 Contract. On September 3, the buyer declared the purchase intention and the seller submitted the standard warehouse receipt. On September 4, INE matched and distributed the standard warehouse receipt. On August 5, the buyer made the payment and received the receipts, and the seller was paid. On June 7, the seller submitted the receipts, and the whole delivery process was successfully completed.
Mr. Jason Yu, Deputy General Manager of Sinochem Energy High-Tech Co., Ltd., told reporters that from the perspective of participation process, the delivery system is relatively smooth, there is no direct relationship between the bonded delivery of crude oil futures and the import qualification and quota. Many enterprises do not know much about the futures delivery system. After participating in the first delivery, the company will get a better understanding of the settlement and delivery system and processes, and accumulate experience for better use of crude oil futures to manage price risk and service production and operation in the future.
The international market has growing tendency to accept Shanghai’s crude oil.
Since its listing and trading on March 26, 2018, the crude oil futures market has maintained stable operation as a whole, the number of market players has increased steadily, different business processes and operations have been smoothly connected, and the business processes have been fully unimpeded, gradually giving full play to the functions.
From the perspective of market scale, as of September 7, 2018, according to unilateral statistics, the cumulative deals of crude oil futures reached 11,808,200, and the total turnover reached RMB 5.77 trillion. The average daily deals reached 102,700, with a maximum of 205,000; the average daily open interest is 15,000, with a maximum of 23,600; the average daily turnover reached RMB 50.166 billion, with a maximum of RMB 108.645 billion. Many international organizations such as the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC) have paid close attention to Shanghai crude oil futures and made an objective analysis.
From the perspective of market price, the price of Shanghai crude oil futures was slightly higher than that of Brent crude oil futures, and was in a reasonable range. Meanwhile, it had good relevance with the prices of Brent, WTI, Oman and other international mainstream futures, not only reflecting the general trend of international market price, but also maintaining its own independent market trend and reflecting the supply-demand relationships in China and the Asia Pacific region. In addition, there is a significant correlation between crude oil futures and other petrochemical futures such as asphalt futures.
From the perspective of market participation, currently there are more than 30,000 crude oil futures accounts, 15% of them are special corporate clients, which are mainly securities companies, fund management companies, trust companies and other financial institutions, reflecting enterprise asset management’s strong demand for crude oil futures in China. Some state-owned oil companies and multinational oil companies have signed the long-term supply contracts that take the price of Shanghai crude oil futures as the benchmark price and take RMB for calculation and settlement. Overseas clients have an increasing participation rate, and the proportion of open interest held by international traders has increased from 5% when they were listed for two months to about 15% at present.
In addition, INE has steadily promoted overseas registration, completed the registration of ATS (automated trading service) in Hong Kong on March 15, 2018, steadily promoted the registration of RMO in Singapore, and completed the filing of 32 overseas intermediaries. Shanghai Futures Exchange has established an overseas office in Singapore and will continue to set up overseas offices in other places in the future.
The first delivery of the first international futures: full preparations
To make full preparations for the first delivery, INE organized an “all-round, cross-scenario, whole-process” simulation delivery drill to, and made key breakthroughs on the problems found in the drill; attached great importance to the whole-process management of warehouse receipt generation, actively cooperated with the customs and other relevant law enforcement agencies to implement the futures supervision policy, guided the first ship’s crude oil to be put into the futures warehouse smoothly, and urged the delivery warehouses to carry out fire safety inspection; comprehensively carry out delivery training for market participants and supervisors at all levels; thoroughly discussed and optimized warehouse receipt allocation principles, timely carried out the crude oil futures-to-cash during the non-standard warehouse receipt period, met the personalized delivery needs of entity enterprises, and effectively made up for the limitations of centralized delivery of standard warehouse receipts.
INE stated that, some achievements have been made since the listing of Shanghai crude oil futures, this indicates that the design of Shanghai crude oil futures contracts, basic operation system, international system, cross-border supervision, technical system docking and other aspects have withstood the preliminary test of the market. But huge market development cannot be achieved overnight. The construction of crude oil futures market is a complex and long-term systematic project. The maturity and functions of the market need to be developed step by step. Crude oil futures have been traded actively since its launching, but still lag far behind the mature varieties in Europe and America. In order to give better play to the functions of crude oil futures, we need to further develop the market, improve overseas participation and increase liquidity and position scale, and all market participants should make joint efforts to steadily cultivate the market and maintain market fairness and order.
Chen Jie, Director of Sinopec Group(stock code 600028, stock analysis) Petroleum Commercial Reserve Co., Ltd., which was a designated delivery warehouse of the crude oil futures, told reporters that, “We are honored to use our crude oil warehouse to help the client complete the first delivery of crude oil futures. It is a great test of our ability in doing futures business. Fortunately, the Exchange has provided training on the delivery business rules and warehouse receipt system, and the company’s leaders and frontline employees at the oil depot attached great importance to the futures warehousing business, provided all-round services for the client in strict accordance with the futures requirements, actively provided support on the berthing, loading and unloading operations of tankers, and earnestly fulfilled the responsibilities of ensuring the quantity, quality and safety of crude oil in the storage process. I believe that with the continuous development of the Shanghai crude oil futures market, more and more clients will participate in it.”