Shipowners will be able to start trading low sulphur marine fuel futures contracts from the start of February next year, according to the Intercontinental Exchange (ICE).
The new contracts have been developed in response to significant market demand in advance of the IMO 2020 sulphur emissions regulations, said ICE.

“Our customers have expressed a strong desire for marine fuel 0.5% specific derivative contracts and our new contracts will allow market participants to hedge forward positions in an industry which today consumes more than 3m barrels per day of high sulphur fuel oil,” said Jeff Barbuto, ICE’s vice president of oil markets. “The contracts will operate alongside ICE’s benchmark low sulphur gasoil futures, fuel oil and LNG markets providing customers with a range of hedging tools to assist with the transition to the new regulations in 2020.”

The contracts are: fuel oil outright - marine fuel 0.5% FOB for both Rotterdam Barges and Singapore (Platts) Future; fuel oil diff - marine fuel 0.5% FOB Rotterdam Barges (Platts) vs 3.5% FOB Rotterdam Barges (Platts) Future, fuel oil diff - marine fuel 0.5% FOB Singapore (Platts) Future vs 380 CST Singapore (Platts) Future; fuel oil outright - marine fuel 0.5% FOB USGC Barges (Platts) Future; and fuel oil diff - marine fuel 0.5% FOB USGC Barges (Platts) vs USGC HSFO (Platts) Future

ICE’s new futures contracts will settle against Global Platts physical marine fuel 0.5% assessments. Last month the New York Mercantile Exchange (NYMEX) announced plans for 11 marine fuel 0.5% futures contracts with the first listed contract set for early December 2018. ICE had previously said that the market “lacked a 0.5% hedging instrument” and that at present traders were using ICE low sulfur gasoil futures to take positions in preparation for the IMO’s sulfur cap. Gasoil futures and options grew 11% in the period January to November 2018 versus the same period in 2017, it added. Platts reports that liquidity in 0.5% futures is as yet unclear, but traders point to increased activity through 2019 as more clarity has been provided, with physical demand for 0.5% marine bunker fuel likely to pick up towards the fourth quarter of next year.

https://www.tradewindsnews.com/finance/1656699/ice-lsfo-futures-set-for-february-2019-start