US’ CME to launch ICIS-linked China specific origins methanol futures contract in Feb

SINGAPORE (ICIS)–The CME Group aims to launch an ICIS-linked China methanol futures contract on the New York Mercantile Exchange on 22 February.

Listed under the commodity code CMS, the Methanol CFR (cost & freight) China Specific Origins (ICIS) Futures will have a contract size of 100 tonnes, with a minimum threshold of five contracts traded in each block transaction, subject to a 15-minute reporting window, it said in a statement.

The new methanol futures contract is based on the ICIS’ spot assessment for cargoes of specific origins delivered into China.

The origins of cargoes include Bahrain, Brunei, Chile, Indonesia, Malaysia, New Zealand, Oman, Qatar, Saudi Arabia, Trinidad, and the US.

China is the largest methanol market in the world, with total consumption in 2020 estimated at 69.7m tonnes, with total imports at 12.7m tonnes.

There has been a growing divergence in recent years in prices between cargoes with shipping, insurance and financial restrictions and those without, and a greater desire from the global market for a more accurate insight on trades revolving around the latter.

ICIS was the first to launch the CFR China Specific Origins price assessment in November 2019, reflecting spot trade for cargoes without any form of restrictions.

The price assessment is the most widely-used price benchmark in China for both spot and term negotiations by the end of 2020, according to ICIS data.

The new listing is effective from 21 February, with trading to take place from 22 February, pending regulatory approval, the CME said in a statement on 13 January.

The contract will be available for trading on the CME Globex electronic platform and for submission for clearing via CME ClearPort.

The first listed contract month will be for February.

Trading in January-November contract months shall terminate at the close of trading on the last Friday of the contract month.

The new contract follows CME’s launch of a European methanol futures contract in 2018. The contract is referenced to the physical spot price for T2 material, which is assessed on a weekly basis by ICIS.

(recasts last paragraph for clarity)

Photo: The New York Mercantile Exchange (NYMEX) is located in lower Manhattan. (Source: Sipa/Shutterstock)