SINGAPORE: Singapore Exchange (SGX) Monday launched methanol futures and swap contracts to help methanol producers, traders and downstream users manage risk and improve price discovery amid rising demand.
The new contracts are cash settled in reference to the S&P Global Platts daily price assessment for methanol.
The SGX Platts Methanol CFR China Swap and the SGX Platts Methanol CFR China Futures will both be listed with 12 consecutive contract months, starting from 24 February 2020.
Methanol is used predominantly as feedstock for olefins and formaldehyde production, as well as in direct fuel blending. In recent years, environmental concerns has led to the use of cleaner products and methanol-to-olefins plants.
China’s apparent demand for methanol grew by nearly 17% year-on-year to 69.3 million metric tonnes (MT) in 2019, on the back of sharp growth in the petrochemical and downstream manufacturing sectors. Platts’ CFR China index has similarly grown in stature with nearly 10 million MT of imports in 2019.
William Prajogo, petrochemical product manager at SGX, says, “In today’s evolving market, international traders are seeking more transparency and better price-discovery and risk-management tools to hedge methanol prices and exposure. We are pleased to be working with Platts, which has a widely accepted benchmark for the physical market for methanol. The launch complements and broadens our other petrochemical products, which now serve as key offshore tools for forward price discovery. Across our petrochemical suite, we have seen a 100% compound annual growth rate every year for the past four years and we are expecting this trend to continue this year.”
Shelley Kerr, Global Head of Petrochemicals Markets, S&P Global Platts, says, “Methanol is an increasingly important component used in various supply chains, forecast to grow strongly alongside China – the largest importer of methanol globally. S&P Global Platts’ daily CFR China methanol assessment provides a physical pricing benchmark to major market participants in Asia. As an independent price reporting agency, we welcome the role we play in providing data and information services to our customers, and bringing increased transparency to the Asian methanol markets.”