On August 25, 2004, under the approval of China Securities Regulatory Commission (CSRC), fuel oil contract was listed on Shanghai Futures Exchange for trading. Mr. Shang Fulin, Chairman of CSRC, and Mr. Han Zheng, Mayor of Shanghai, attended the opening ceremony and made their speech of congratulations.

In his speech, Mr. Shang Fulin said that the establishment of capital markets, including futures markets, had always been the priority of the Central Committee of the Party and the State Council. The introduction of fuel oil futures is a significant step in the priciples that are upheld by Guidelines on the Enhancement of Reform & Opening-up and Stable Development of Capital Market, released by the State Council. It is the desirable results of the innovation program on futures products.

He said that China increasingly integrating into the world economy has put it in more closer cooperative relationship with the other economies on the areas such as economic development, resources allocation. Oil is an important strategic material all over the world.Currently, China has become the second largest consumer and the third largest importer globally. To accelerate the establishment and completion of a mechanism of risk dissipation on oil is beneficial to the sustained and healthy progress of state economy. It is justifiably feasible that fuel oil contract is listed for trading before the other oil-related futures contract, since its conditions are more suitable. Through the trading of fuel oil contract, the related firms could have full access to the price information and a platform of market risk control. On the other hand, the global oil market system is expanded with the improved mechanism.

He emphasized that China’s futures market, which is still at its beginning stage, is tinged with the characteristics that an emerging and transitional market has. In that context, stringent regulation and standardized operation are particularly required. Fuel oil futures contract is the first futures contract agreed and approved by the State Council and CSRC respectively since the clearance and consolidation in China’s futures market. There is a period between the listing of a futures contract and its establishment in which the possible frustrations and conflicts should be accomodated with sufficient understanding and preparation. Principles of regulated starting, steady development, strict risk contral and accruement of experience are embraced. Market supervision and services should be carried forward to such a solid extent that the healthy development of a new contract can be promoted and and the steady progress of the market.

It is exected by Mr. Shang that with the coordiantion and support of the related parties, together with the active participation and joint efforts of the market users, fuel oil contract will be traded in a regualted and healthy manner, which will stimulate the efficiency of its market funcitons and serve the state economy well.

Han Zheng, on behalf of Shanghai Municipal Government, expressed warm congratulations to the opening of fuel oil futures contract on Shanghai Futures Exchange. He said that oil is of strategic significance to the state economy. The listing of fuel oil futures will better the pricing structure of oil-related products and complete the market system. He believed that under the guidance of CSRC and with the joined efforts of SHFE and all the market participants fuel oil futures will definitely gain a positive and healthy development and play an important role in the price fixing markets both at home and abroad. He said that Shanghai government will fully work with CSRC and assist SHFE as always in its efforts on market expansion, improvement of business environment and service quality, so as Shanghai’s futures market will be enhanced to a higher level.

It is estiimated that by the end of July 2004 the national trading turnover of futures market had been near RMB 1 trillion (USD 120.9 billion), 94% rise year on year.