Shanghai Petroleum Exchange, China's first commodity and futures exchange for oil products, reported robust trade last Friday, its first formal business day.

Friday's transactions of gasoline, which is among the first products to be traded on the exchange, totaled 72,120 tons and were valued at 253 million yuan (US$31.6 million), the bourse's general manager Chen Zhenping said.

Futures trading was brisk for October and November and the three biggest deals alone totaled 51,460 tons, 71.4 percent of the total, he said.

Yet bidding prices were stable on Friday and the difference between the highest and lowest bids was 60 yuan per ton, said Chen.

The exchange started by trading gasoline and will also trade bitumen, methanol and glycol in the near future. In the long run, it will launch trading in other petroleum and chemical products including crude and refined oil and liquefied gas.

The exchange has signed deals with 65 traders, ten warehouses and two banks.

With a registered capital of 105 million yuan, the exchange is a joint venture between Shanghai Jiulian Group and four domestic petroleum and chemical giants including PetroChina and Sinopec.

Insiders say two overseas oil giants have set up branches in China to trade on the Shanghai Petroleum Exchange but their identities have not been disclosed.

With the increasing participation of international petroleum groups, China is getting more prepared to fix oil prices on its own, said Ma Weifeng, a researcher at Shanghai-based Tongji University.

In August 2004, fuel oil started to be traded on Shanghai Futures Exchange (SFE). In 2005, daily trade of fuel oil at SFE was 76,000 tons and increased to 110,000 tons in 2006.

The steady operation of the SFE has shaped up a price-fixing system featuring changes of supply and demand in China's fuel oil market, Ma said.

The system will help China's fuel oil spot transactions adjust prices in accordance with supply and demand on the international market and avoid risks.

China used to fix spot transactions prices of fuel oil products according to changes of supply and demand in Singapore's oil market.

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