Spots dominate commodity exchange market: 2019 results
As of the end of 2019, the amount of spot deals in the commodity exchange market increased by 2% (which is over 20 billion rubles), to total 957 billion rubles. The segment of petroleum products continues to demonstrate the highest liquidity, accounting for 93% of the overall trading volume. This was supported by the growth of actual supplies and petroleum product prices. These findings are published in the Bank of Russia’s review Commodity Exchange Market Analysis for 2019.
Contrastingly, the natural gas market recorded a decrease in the trading volume for the second consecutive year — from 60.5 billion rubles in 2017 to 44.7 billion rubles as of the end of 2019. This happened because the major supplier reduced its gas sales.
According to the review, transactions involving commodity supply operators’ (CSO) services are trending upwards in the small-scale wholesale segment of the petroleum product market. CSOs assist buyers in physical supplies of underlying commodities. As of the end of 2019, five CSOs had the Bank of Russia’s accreditation in the petroleum product and natural gas market. This year, the CSO status was granted to a railway company, which will help establish the CSO institute in commodity exchange markets where rail supply of cargo (petroleum products, coal, timber, mineral fertilisers, etc.) is the preferred method of delivery.
Moreover, the year 2019 recorded emerging demand in the market of deliverable futures contracts, which also continues to grow this year. According to the results of the last year, the value of transactions with deliverable futures contracts for petroleum products increased by 29%, to total 20 billion rubles.
It should be emphasised that futures are traded at geographical pricing hubs, such as Allaguvat (Bashkortostan), Surgut (Khanty-Mansi Autonomous Area — Yugra), and others. However, physical commodity supplies may be performed from various oil refineries to the destination station specified by a buyer, with account of shipping costs. This trading model ensures more competitive pricing terms and higher liquidity of trading of instruments involving physical commodity delivery. At the end of the year, diesel export futures started to be traded, and the first FOB Primorsk tanker delivery was performed.