China Monday set up its second petroleum exchange in Dalian, a port city in northeastern Liaoning province, about four months after the launch of the Shanghai Petroleum Exchange.

"We plan to start trading fuel oil, bitumen, and several other petroleum and chemical products in May next year," said Sun Xueshi, president of the exchange.

Experts believe the move will strengthen the nation's petroleum market, sharpen the competitive edge of domestic petroleum and chemical companies and increase oil supplies to northeast China.

Sun said the exchange, with a registered capital of 10 million yuan (1.28 million U.S. dollars), is expected to have a trade volume of up to 50 billion yuan (6.39 billion U.S. dollars) per year.

The foundation for the exchange is the petroleum and chemical products market in the Dalian Bonded Area, which has an annual trade volume of 10 billion (1.28 billion U.S. dollars).

Sun said the investors in the exchange are Liaoning's Liaohe Petroleum Exploration Bureau, a subsidiary of China National Petroleum Corporation, and Sinopec Shengli Oilfield Company in eastern Shandong province.

He acknowledged that the investors would raise the exchange's registered capital to 100 million yuan (12.8 million U.S. dollars)once it starts operation.

He said the exchange now has more than 100 traders, including petroleum and chemical companies and warehouses.

He added that exchange officials are still mulling transaction rules without divulging further details.

Dalian is one of China's major refined oil production bases and major transfer ports for crude oil. Last year, it processed 19.68 million tons of crude oil and transferred a further 21.85 million tons.