SHANGHAI, March 27. /TASS/. China’s launch of trading in the yuan-denominated oil futures on the Shanghai International Energy Exchange (INE) has become a positive point for development of the oil market in general, Vice President of the Russian Chamber of Commerce and Industry Vladimir Padalko told TASS on Tuesday.
"The oil futures trading start on the exchange in China is an expected and, from our point of view, a positive point in development of the oil market at large. China is the largest oil consumer and one need not to be guided by prices set in points of sale in other states because consumption is here. Almost everyone focuses on oil trading in China," Padalko said.
First trading sessions showed the good oil price but this process should pick up momentum, the expert says. "Nobody says that the oil exchange in China will outperform all other exchanges tomorrow. The point is in a new pricing scheme and it will be implemented exactly in China and will fluctuate in line with consumption volumes annually generated by China," Padalko says.
"This is also beneficial for us, because we are among the largest suppliers of hydrocarbons to the China market. I think we will acquire our own experience in organizing such trading," he added.
Trading in the yuan-denominated oil futures were launched on the Shanghai International Energy Exchange (INE) on March 26. The contract amount is 1,000 barrels, the Exchange reports. The minimal price increment is 0.1 yuan per barrel. Deliveries will be from ports of Oman, Qatar, Yemen, Iraq (Basra) and East China. Supplied oil will be located in seven storages situated in coastal areas of the China provinces of Zhejiang, Shandong, Guangdong, Liaoning, and in the Shanghai deep-water port.
Foreign participants in trading can make funding in a foreign exchange at a rate in the China Foreign Exchange Trade System. The China’s Finance Ministry said earlier that nonresidents working with this instrument would be exempt from income tax payment for the period up to three years.
China is currently the leading oil importer and ranks second by the volume of its consumption. The country imported 420 mln tonnes of oil in 2017.