BITUMEN FUTURES RULES OF THE SHANGHAI FUTURES EXCHANGE

CHAPTER 1 GENERAL PROVISIONS

Article 1 These Bitumen Futures Rules are made in accordance with the General Exchange Rules of the Shanghai Futures Exchange, the SHFE Bitumen Futures Contract Specifications, and the relevant business rules to regulate business related to bitumen futures at the Shanghai Futures Exchange (the “Exchange”).

Article 2 These Bitumen Futures Rules shall be observed by the Exchange, Members, Clients, Delivery Storage Facilities, Designated Inspection Agencies, Futures Margin Depository Institutions, and other participants of the futures market.

CHAPTER 2 TRADING

Article 3 Contract size for bitumen futures is ten (10) metric tons per lot.

Article 4 Price quotation of a bitumen futures contract is Yuan (RMB)/metric ton.

Article 5 Minimum price fluctuation of a bitumen futures contract is one (1) Yuan/metric ton.

Article 6 Listed contracts of bitumen futures cover the monthly contract for the most recent twelve (12) consecutive months and the four (4) quarterly contracts thereafter.

Article 7 Trading hours of a bitumen futures contract are 9:00 a.m. to 11:30 a.m., 1:30 p.m. to 3:00 p.m., and other hours specified by the Exchange.

Article 8 The last trading day of a bitumen futures contract is the 15th day of the contract month. The last trading day will be postponed accordingly if it is a legal holiday in China, and will be subject to separate adjustment and announcement by the Exchange if it falls in the Spring Festival month or any other month specially designated by the Exchange.

Article 9 Contract symbol of bitumen futures is BU.

Article 10 For the hedging and arbitrage quotas of a bitumen futures contract, regular months extend from the day of listing to the last trading day of the second month before the delivery month, while nearby delivery months cover the month before the delivery month and the delivery month.

Article 11 An application for a regular month hedging quota of a bitumen futures contract shall be submitted by the last trading day of the second month before the delivery month of the contract. Late applications will not be accepted by the Exchange.

An application for a nearby delivery month hedging quota of a bitumen futures contract shall be submitted between the first trading day of the third month before the delivery month of the contract and the last trading day of the month before the delivery month. Late applications will not be accepted by the Exchange. An application for a nearby delivery month arbitrage quota of a bitumen futures contract shall be submitted between the first trading day of the second month before the delivery month of the contract and the last trading day of the month before the delivery month. Late applications will not be accepted by the Exchange.

Article 12 Hedging quota of a bitumen futures contract shall no longer be used in a revolving manner starting from the first trading day of the delivery month.

CHAPTER 3 DELIVERY

SECTION 1 GENERAL PROVISIONS

Article 13 A bitumen futures contract may be physically delivered through an Exchange of Futures for Physicals (“EFP”), a delivery warehouse, or a delivery factory.

Bitumen futures adopt duty-paid delivery.

Article 14 Grade and quality specifications of bitumen shall conform to the standards of the Ministry of Transport of the People’s Republic of China (“MOT”). Quality of the #70 Class-A Road bitumen used for physical delivery of bitumen futures contracts shall meet the technical requirements set forth in Table 4.2.1-2 of the currently effective Technical Specifications for the Construction of Highway Bituminous Pavement of the MOT.

In case of any revision to the Technical Specifications for the Construction of Highway Bituminous Pavement, detailed requirements for implementing the revised technical specifications shall be separately announced by the Exchange.

Article 15 The deliverable bitumen shall be registered commodities approved by the Exchange.

Article 16 Loss and tolerance

(i) The loss of bitumen at each load-in and load-out, when added together, shall not exceed 2‰. The load-in owner and the load-out owner shall each assume 50% of such loss.

(ii) Tolerance: the weight of bitumen underlying a standard warrant is ten (10) metric tons, with a maximum tolerance of ±3% at load-in or load-out.

(iii) Tolerance settlement

Any load-in tolerance (after deducting a loss of 1‰) of bitumen shall be settled by the owner directly with the delivery warehouse within three (3) business days after the load-in at the settlement price of the nearest month bitumen futures contract on the trading day preceding the load-in.

Any load-out tolerance (after deducting a loss of 1‰) of bitumen shall be settled by the owner directly with the delivery warehouse or Designated Bitumen Factory within three (3) business days after the load-out at the settlement price of the nearest month bitumen futures contract on the trading day preceding the load-out.

Article 17 Delivery unit of a bitumen futures contract is ten (10) metric tons per standard warrant.

Article 18 Delivery period of a bitumen futures contract is the two (2) consecutive business days immediately following the last trading day of the contract.

Article 19 The benchmark price for delivery settlement of a bitumen futures contract is the arithmetic average of the settlement prices of that contract over the last five (5) trading days on which it was traded.

Article 20 Delivery venue: the delivery warehouses and delivery factories of the Exchange, to be separately announced by the Exchange.

Article 21 The exchange of futures for physicals (“EFP”) is the process where the members or clients who hold opposite positions of a futures contract expiring in the same month reach an agreement through negotiation to, upon the approval of the Exchange, tender a notice of EFP to have their respective positions in such contract closed out by the Exchange at the price prescribed by the Exchange, and exchange, at the price mutually agreed upon and in the same opposite positions, the warrant or other take-delivery document of the underlying commodity which has a quantity equivalent to and is identical to the underlying commodity of the futures contract.

SECTION 2 WAREHOUSE DELIVERY

Article 22 Inspection methods and inspection agencies

The quality of Bitumen shall be established at load-in and load-out by Designated Inspection Agencies of the Exchange (the list of which is to be separately announced by the Exchange) using the sampling method specified in the currently effective Testing Procedures for Bitumen and Bituminous Mixtures in Highway Engineering of the MOT and the test methods specified in the currently effective Technical Specifications for the Construction of Highway Bituminous Pavement of the MOT.

The inspection agency for bitumen intended for load-in shall be selected from the foregoing list by the seller; the inspection agency for bitumen intended for load-out shall be selected from the list by the buyer. If the delivery warehouse does not agree with the buyer’s or seller’s choice, it may negotiate with the relevant party for a replacement. If the negotiation fails, the delivery warehouse may request the Exchange to select the inspection agency for them. The buyer, seller, and delivery warehouse shall cooperate with the Designated Inspection Agency in the inspection process. The inspection cost shall be borne by the buyer at load-out or the seller at load-in.

Article 23 While being loaded in or out, bitumen shall meet the minimum quantity required by the Exchange (which will be separately announced by the Exchange), shall be transported with vehicles meeting the requirements of the port, dock, and delivery warehouse on such aspects as unloading and measuring management, and shall comply with the safe operation practices of the delivery warehouse.

Article 24 Load-in application (delivery notice)

Before shipping any bitumen to a delivery warehouse, an owner shall submit a load-in application (delivery notice) and an application for standard warrant creation to the Exchange. The load-in application shall specify such information as the product, grade, quantity, manufacturer, and the name of the proposed delivery warehouse. A Client shall authorize its carrying FF Member to submit the load-in application (delivery notice).

Article 25 Approval of load-in application

If storage capacity permits, the Exchange will determine whether to approve a load-in application within three (3) business days based on the owner’s intents. The owner shall ship commodity to the delivery warehouse specified in the approved load-in application within the time period prescribed by the Exchange. Any bitumen loaded in the warehouse without the approval of the Exchange or beyond the prescribed time period shall not be used for physical delivery.

A load-in application shall be effective for fifteen (15) days from the date of approval.

Article 26 Load-in application deposit

An owner shall provide true and accurate materials for the load-in application and shall pay an application deposit of 30 yuan/metric ton, which will be deducted by the Exchange from the relevant Member’s Clearing Deposit.

The Exchange shall return the application deposit to the Member’s Clearing Deposit after the owner has completed the load-in procedures and received the standard warrants. If only a portion of the quantity specified in the load-in application is loaded in, the application deposit shall be refunded based on the actual load-in quantity; if none of the specified quantity is loaded in, the deposit will not be refunded and shall be remitted by the Exchange to the delivery warehouse.

Article 27 Load-in inspection

A delivery warehouse shall inspect the bitumen it receives and verify the accompanying documents.

The bitumen to be loaded in shall be directly shipped to the delivery warehouse by the registered manufacturer. Bitumen shall not be mixed during transportation or storage. The delivery warehouse has the right to monitor and manage the transportation process of bitumen and, if it believes any potential quality problem may exist, conduct a sample inspection. The owner will be required to unload only after the bitumen passes the inspection.

The to-be-loaded-in bitumen at a delivery warehouse shall be inspected by a Designated Inspection Agency in terms of quality and weight. The quality shall be that shown on the quality inspection report issued by the Designated Inspection Agency, and a standard warrant may only be issued if the report indicates that the bitumen meets the quality standards of the Exchange. The weight shall be that shown on the weight inspection report issued by the Designated Inspection Agency. The owner shall ensure that the bitumen loaded in meets the quality standards of the Exchange.

Article 28 Owner’s oversight of load-in

An owner shall oversee the load-in of its bitumen into the delivery warehouse, if not, the owner will be deemed to have agreed the testing results of the Designated Inspection Agency.

Article 29 Storage of bitumen

The bitumen of different manufacturers shall be stored in different tanks.

Article 30 Required documentation for deliverable commodity

(i) Domestic bitumen: the certificate of quality issued by the registered manufacturer, loading document issued by the original factory, and the original of the testing certificate issued by the Designated Inspection Agency.

(ii) Imported bitumen: the customs declaration form, the original of the customs clearance form (to be returned by the Exchange after photocopying), the certificate of commodity inspection, and the original of the testing certificate issued by the Designated Inspection Agency.

If there has been any adjustment to national policies on such matters as tax and commodity inspection, the revised policies shall prevail. Under such circumstance, the Exchange will separately announce the new requirements for the documentation of imported commodity.

Article 31 Issuance of standard warrants

(i) The Exchange reviews the documentation

After load-in and acceptance of bitumen, the carrying Member shall bring the required documentation to the Exchange for review and verification. Once the documentation is verified, the Exchange will instruct the delivery warehouse to issue standard warrants through the Standard Warrant Management System.

(ii) The warehouse issues standard warrants

After receiving the Exchange’s instruction to issue standard warrants, the delivery warehouse shall issue them through the Standard Warrant Management System.

Article 32 Take delivery

(i) Where the lawful bearer of a standard warrant intends to take delivery, the delivery warehouse shall release the commodities after verifying the standard warrant. The owner may take delivery directly or indirectly by authorizing the delivery warehouse to ship the commodity.

(ii) At load-out, the delivery warehouse shall heat the bitumen stored in the tanks to a temperature of no lower than 130 degrees Celsius and no higher than 160 degrees Celsius.

(iii) Load-out inspection

Any lawful bearer of a standard warrant who intends to take delivery shall engage a Designated Inspection Agency to conduct on-site inspection on the quality and weight of the bitumen to be delivered. The weight of bitumen shall be that shown on the weight inspection report issued by the Designated Inspection Agency. Quality inspection shall be based on samples taken from the tank, which are to be divided into Sample A, to be used for testing, and Sample B, to be sealed and preserved as a specimen.

Any owner who does not engage a Designated Inspection Agency to conduct the inspection shall be deemed to have approved the quality and weight of the shipment and the delivery warehouse will no longer handle any objection over the bitumen thus delivered.

(iv) Acceptance of quality dispute

Any lawful bearer of a standard warrant who disputes the quality of the delivered bitumen shall submit a written objection, accompanied by the quality inspection results issued by the Designated Inspection Agency, to the delivery warehouse within ten (10) business days following the physical delivery; failing which, the bearer shall be deemed to have no objection over the delivered bitumen and the delivery warehouse will no longer handle any objection regarding any bitumen thus delivered.

(v) Completion of load-out confirmation form

When shipping any bitumen, the delivery warehouse shall promptly complete a Load-out Confirmation Form for Standard Warrant in duplicate, one for the owner and one for itself, and properly retain its copy for future examination.

Article 33 The buyer and the seller shall arrange the transportation options themselves if they intend to conduct physical delivery at a delivery venue.

Article 34 A delivery warehouse shall assume full responsibilities for the quality, quantity, safety, and other relevant aspects of any bitumen in storage from its acceptance and load-in to its load-out. The Exchange will inspect the quality of the bitumen in storage annually.

SECTION 3 FACTORY DELIVERY

Article 35 Application

Before issuing any factory standard warrants, a Factory shall submit an application to the Exchange, specifying such information as the product, name of the carrying Member, name of the owner, and the quantity of standard warrants to be issued.

Article 36 All factory standard warrants created before September 15 (in case that day falls on a public holiday, the date shall be postponed accordingly) each year shall be canceled before the last business day (inclusive) of October.

Article 37 “Daily shipment quantity” of a Factory means the minimum shipment quantity of bitumen that the Factory shall arrange within twenty-four (24) hours. The confirmation of and adjustment to daily shipment quantity of a Factory shall be approved and announced by the Exchange. The Factory shall not change its daily shipment quantity without authorization. If a manufacturer needs to change its daily shipment quantity for routine maintenance and repair or other reasons, it shall apply to the Exchange for approval in advance.

Article 38 Application for taking delivery

(i) An owner who intends to take delivery shall submit an application through the Standard Warrant Management System to the Factory prior to the 25th day (in case that day falls on a public holiday, the date shall be advanced accordingly) of the month prior to the proposed take-delivery month. The application shall specify such information as the product, quantity, the proposed take-delivery date, method, and plan (including daily quantity), as well as the identification certificate number and telephone number of the delivery taker.

(ii) The Factory will confirm the owner’s application within two (2) business days of receiving it after considering, among others, the owner’s proposed take-delivery date and plan as well as corresponding manufacturer’s production plan.

If the owner’s proposed take-delivery date coincides with that of other owners holding factory standard warrants and their total daily take-delivery quantity exceeds the daily shipment quantity of the Factory, then the Factory may make an overall arrangement for shipment considering the order of their submission of applications, their take-delivery plans, and production plans. The factory shall also provide the owner with a take-delivery time period to choose from and a corresponding shipment plan (including daily shipment quantity) within two (2) business days after the owner’s submission of application. If agreeing to the arrangement, the owner may choose one day from the said period as the take-delivery date and confirm the shipment plan; If not, the owner may renegotiate with the Factory until they agree on a take-delivery date and the shipment plan. The Factory shall arrange for shipment from the first day of the proposed take-delivery month, unless otherwise agreed with the owner.

(iii) The Factory shall be exempt from any financial liability for any owner’s delay in taking delivery due to the coincidence described in the foregoing paragraph, provided that the Factory shall timely report such delay and its causes to the Exchange for written record.

Article 39 The weight of bitumen loaded out shall be established by the weight inspection of the Factory. Any load-out tolerance (after deducting a loss of 1‰) of bitumen shall be settled between the Factory and the owner at the settlement price of the corresponding Exchange-listed nearest month futures contract on the trading day preceding the load-out day.

Article 40 The Factory shall ensure that the bitumen loaded out meets the quality standards provided in the bitumen futures contract of the Exchange. During the load-out of bitumen, the Factory shall provide the certificate of quality to the owner, take bitumen samples from different tanks in the presence of the owner, and seal them after confirmation by both parties.

The Factory shall retain the bitumen samples for a period of sixty (60) days from the date of shipment as the basis for resolving any possible quality dispute. The temperature of the bitumen at load-out shall not be lower than 130 degrees Celsius and no higher than 160 degrees Celsius.

Article 41 An owner shall take delivery at the Factory on the agreed take-delivery date according to the take-delivery plan. If the owner misses the agreed take-delivery date but takes delivery within seven (7) days (including the 7th day) thereafter or if the owner fails to take delivery according to the agreed daily take-delivery plan due to any reasons not attributable to the Factory, then the Factory shall remain responsible for the quality of the commodity according to the bitumen futures specifications, and shall make an overall shipment plan based on the take-delivery quantities of all owners until all corresponding commodities are shipped. The owner shall pay an overdue fine to the Factory.

Overdue fine = 5 yuan/metric ton per day × quantity of commodity that should have been taken × number of days overdue

Any shipment delay caused by the owner shall be resolved as agreed between the parties if they reach a separate agreement.

Article 42 If an owner fails to take delivery at the Factory within seven (7) days (including the seventh day) after the agreed take-delivery date, which leads to the cancellation of its factory standard warrants, then the underlying commodities will be converted into physical products, and the owner shall pay an overdue fine to the Factory and negotiate details for taking delivery with the Factory.

Overdue fine = 35 yuan/metric ton × quantity of commodity that should have been taken.

Article 43 If an owner takes delivery on the agreed take-delivery date at the Factory, but the Factory fails to ship the commodity according to the agreed shipment plan but still starts the shipment as planned within seven (7) days (including the seventh day) after the agreed take-delivery date, then the Factory shall pay compensation to the owner.

Compensation = 50 yuan/metric ton × quantity of commodity that should have been shipped according to the daily shipment plan

Article 44 If the Factory fails to start the shipment as per the daily shipment plan within seven (7) days (including the seventh day) after the agreed take-delivery date, the owner may choose either of the followings:

(i) On the seventh day after the agreed take-delivery date, the owner may notify the Factory that it will cease accepting any commodity that should have been shipped from the eighth day after the agreed take-delivery date, and the Factory shall refund the corresponding commodity payment and pay additional compensation to the owner.

Refunded commodity payment and additional compensation = compensation settlement price × quantity of commodity that should have been shipped × 120%

The compensation settlement price is the settlement price of the corresponding Exchange-listed nearest month futures contract on the trading day preceding the eighth day after the agreed take-delivery date.

(ii) If on the seventh day after the agreed take-delivery date, the owner fails to notify the Factory that it will cease accepting any commodity that should have been shipped, the parties shall negotiate the details on taking delivery of such commodity.

Article 45 If a Factory commits any default described in Article 43 or 44, it shall directly pay compensation to the owner. If the Factory fails to make the payment in full or in part, the Exchange shall pay the deficient amount to the owner in the following steps:

(i) with the bank performance guarantees or other guarantees provided by the Factory; or

(ii) with the Exchange’s funds and recourse to the Factory by such means as legal proceedings.

Article 46 If an owner commits any default described in Article 41 or 42, it shall directly pay overdue fine to the Factory. If the owner fails to make the payment in full or in part, the Factory may recourse to the owner by such means as legal proceedings.

Article 47 If any losses are incurred to either a Factory or an owner due to any event described in Article 41, 42, 43, or 44, and both parties agree to reach a separate agreement, such agreement shall prevail. The agreement shall be filed with the Exchange for record.

Article 48 Quality dispute resolution

Any lawful bearer of a factory standard warrant who disputes the quality of any delivered commodity stored in a bitumen Factory shall submit a written objection, accompanied by the quality inspection results issued by the Designated Inspection Agency, to the Exchange within ten (10) business days following the physical delivery; failing which, the bearer shall be deemed to have no objection over the delivered bitumen and the Exchange will no longer handle any objection regarding any bitumen thus delivered.

CHAPTER 4 RISK MANAGEMENT

Article 49 The minimum trading margin for a bitumen futures contract is 4%.

Article 50 The stage-based trading margin rates for bitumen futures are as follows:

Stage of Trading	Trading Margin
As of listing	4%
As of the first trading day of the month prior to the delivery month	10%
As of the first trading day of the delivery month	15%
As of the second trading day prior to the last trading day	20%

 

Article 51 The range of price limit for a bitumen futures contract is within ±3% of its settlement price of the preceding trading day.

Article 52 Percentage-based Position Limit and fixed-amount Position Limit for each bitumen futures contract at different stages of trading for an FF Member, a non-FF Member and a Client are as follows (in lots):

 

Note: total open interest and the fixed-amount position limit are based on long or short positions; Percentage-based position limit for the FF Member is the baseline limit.

Article 53 If the Exchange makes a forced position reduction to a bitumen futures contract, the amount of the unfilled orders subject to the order fill, positions eligible to fill the unfilled orders, and the principles and methods for the order fill of unfilled orders shall be determined as follows:

(i) Amount of the unfilled orders subject to the order fill. The term “amount of unfilled orders subject to the order fill” means the total amount of all the unfilled orders submitted after the close of the base date at the limit price into the central order book by each Client who has incurred losses on net positions in the contract of an average level of no less than eight percent (8%) for bitumen futures contracts, of the settlement price of the base date.

(ii) Positions eligible to fill the unfilled orders. The positions eligible to fill the unfilled orders include the net positions, on which the Client, as calculated using the above formula stipulated in the Risk Management Rules of the Shanghai Futures Exchange, records average gains for speculative purposes or for hedging purposes at no less than eight percent (8%).

(iii) Principles for the order fill of unfilled orders. The order fill of unfilled orders shall take place in the order of the following four levels with regard to the amount of gains and whether such positions are speculative or hedging:

Level 1: Unfilled orders shall be filled with the speculative positions eligible to fill the unfilled orders of any Client with average gains on net positions of no less than eight percent (8%) of the settlement price on the base date for the contracts in bitumen futures, or the Speculative Position Gains of Over 8%;

Level 2: Unfilled orders shall be filled with the speculative positions eligible to fill the unfilled orders of any Client with average gains on net positions of no less than four percent (4%) but no more than eight percent (8%) of the settlement price on the base date for contracts with respect to bitumen futures, or the Speculative Position Gains of Over 4%;

Level 3: Unfilled orders shall be filled with the speculative positions eligible to fill the unfilled orders of a Client with average gains on net positions of no more than four percent (4%) of the settlement price on the base date for contracts in bitumen futures, or the Speculative Position Gains Below 4%; and

Level 4: Unfilled orders shall be filled with the hedging positions eligible to fill the unfilled orders of a Client with average gains on net positions of no less than eight percent (8%) of the settlement price on the base date for contracts in bitumen futures, or the Hedging Position Gains of Over 8%.

(iv) Methods for the order fill of unfilled orders. If the amount of the Speculative Position Gains of Over 8% is greater than or equal to that of the unfilled orders, the unfilled orders shall be filled pro rata to the amount of the Speculative Position Gains of Over 8%. If the amount of the Speculative Position Gains of Over 8% is smaller than that of the unfilled orders, the Speculative Position Gains of Over 8% shall be filled pro rata to the amount of the unfilled orders. The residual unfilled orders, if any, shall be filled with the Speculative Positions Gains of Over 4% in the same manner as the foregoing, and if there are still orders remaining, the outstanding unfilled orders shall be filled to the Speculative Position Gains of Below 4%, and so to the Hedging Position Gains of Over 8%. Unfilled orders which eventually remain after all the order fills described above, if any, shall not be filled at all.

CHAPTER 5 MISCELLANEOUS

Article 54 Matters not covered herein shall be governed by the applicable business rules of the Exchange.

Article 55 Any violations of these Bitumen Futures Rules will be handled by the Exchange in accordance with the Enforcement Rules of the Shanghai Futures Exchange.

Article 56 The Exchange reserves the right to interpret these Bitumen Futures Rules.

Article 57 These Bitumen Futures Rules take effect on October 23, 2024.