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SHANGHAI: China’s Shanghai Futures Exchange said on Wednesday that its low-sulphur fuel oil futures contract had been used as a price benchmark for the first time in international trade.

Freepoint Commodities Singapore Pte Ltd had signed the contracts with Chimbusco International Petroleum (Singapore) Pte. Ltd., China Merchants Energy Trading (Singapore) Pte. Ltd., and COFCO International Freight SA, the exchange said in a statement.

“It is the first time that China’s fuel oil futures price is used as the pricing benchmark for overseas trade,” said the exchange.

“Market participants believe that these trade contracts fully prove the growing influence of China’s LSFO futures on bunker pricing in the Asia-Pacific and global markets.”

The futures contract was launched in June 2020 on the Shanghai International Energy Exchange (INE), which is owned by the Shanghai Futures Exchange. The contract comes after a ruling by the International Maritime Organization (IMO) which banned ships from using high sulphur content fuel oil unless equipped with exhaust scrubbers.

The INE had completed the first delivery of the low-sulphur fuel oil contract outside of China in January, a trial the exchange had started in Singapore to boost the contract’s liquidity.

It’s move to enable overseas delivery could help boost China’s ambitions to build a regional bunkering hub in Zhoushan to rival Singapore, which is the world’s biggest ship-fueling port.

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