Baltic Exchange Derivatives Market Volumes Rose in 2022 Led by Middle East Gulf to China VLCC Tankers

Global shipping found itself in turmoil after Russia’s invasion of Ukraine, right on the heels of Covid afflicted shipping channels since 2020. It comes as no surprise this volatility saw hedging and speculative derivates markets volumes increase in the space. London’s Baltic Exchange released data showing the derivatives market for clean and dirty tankers volumes traded in 2022 was up year on year. The most liquid dirty route was the VLCC route Middle East Gulf to China (TD3C), but TD20 (Suezmax) contributed volume too the exchange said.

  • Tanker Forward Freight Agreement (FFA) volumes for the year were 734,972 lots was up 33% on 2021
  • Dry Forward Freight Agreement (FFA) volumes reached 2,218,249 lots, down 12% on 2021.
  • Handysize volumes continued to grow following changes implemented to the Baltic Exchange’s Handysize Index in 2020.
  • Options trading volumes in the dry market were 395,163.

Commenting on the figures, Baltic Exchange Chief Executive Mark Jackson said: “2022 was another year of growth for the tanker FFA market and a good performance for dry bulk. Underpinning these volumes are world-class clearing, volatility, trust in the Baltic Exchange’s settlement data and increased participation by owners, charterers and traders. The Baltic Exchange’s status as a regulated benchmark provider has helped to create a mature and liquid market.”

He added: “Tanker market volatility has largely been caused by Russia’s invasion of Ukraine and volumes jumped significantly after war broke out. This was seen across all sizes and sectors from VLCCs down.

“The most liquid dirty route was the VLCC route Middle East Gulf to China (TD3C), but TD20 (Suezmax) contributed volume too. There were good levels of activity on the clean routes with MR TC2, TC14 and the LR1 route TC5 all contributing significantly. We were also pleased to see continued volume growth in the handysize segment following the change in our vessel description to a 38,000-dwt type.”

What are the Baltic indices?

From The Baltic Exchange

The Baltic indices are based on assessments of the cost of transporting various bulk cargoes, both wet (eg crude oil and oil products),dry (eg coal and iron ore), gas (LNG and LPG) made by leading shipbroking houses located around the world on a per tonne and daily hire basis. The information is collated and published by the Baltic Exchange. We also provide daily container market assessments in collaboration with Freightos and a weekly air freight index as well as assessments on vessel operating costs, Sale & Purchase and vessel recycling prices. 

The principal dry cargo indices are:

  • The Baltic Exchange Capesize Index (BCI); The Brazil-China iron ore route is often considered the key driver of rates for Capesize vessels, which are commonly employed on the route.
  • Baltic Exchange Panamax Index (BPI)
  • Baltic Exchange Supramax Index (BSI)
  • Baltic Exchange Handysize index (BHSI).
  • Baltic Exchange Dry Index (BDI) is calculated by taking the timecharter components of the Baltic’s capesize, panamax and supramax indices. 

The Baltic Exchange International Tanker Routes (BITR) reports on international oil routes and makes up the Baltic Exchange Dirty Tanker Index (BDTI) and the Baltic Exchange Clean Tanker Index (BCTI). 

We cover the gas markets through our LNG (BLNG) and LPG (BLPG) assessments. 

Shipping investors are able to assess the health of vessel earnings through our quarterly operating expenses assessments, as well as our weekly Sale & Purchase and Recycling assessments. 
Forward curves for all listed freight contracts are also published on a daily basis.

Source: The Baltic Exchange, Ship Management

From The TradersCommunity News Desk