Friday marks the two-year anniversary of fuel oil trade on the Shanghai Futures Exchange (SFE) and the increasingly brisk trade has led to the development of a price-fixing system based on supply and demand in China's fuel oil market.

On August 25, 2004, trading of fuel oil opened on the SFE. In 2005, the daily trade of fuel oil had reached 76,000 tons. This year it is 110,000 tons.

From August 2004 to July 31, 2006, the total turnover of fuel oil trade on the SFE had reached 1.25 trillion yuan (156 billion U.S. dollars), with the daily volume averaging 2.666 billion yuan.

About 140 to 160 SFE members participate in the trading each day and renowned overseas and Chinese business media organisations, including Reuters, Dow Jones and HC International, submit daily trading reports.

This trade will help China's fuel oil transactions adjust prices in accordance with supply and demand on the international market and avoid risks, said Ma Weifeng, a researcher at Shanghai-based Tongji University.

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