- SMW 2020: Baltic Exchange Freight & Commodities Forum
As part of Singapore Maritime Week 2020, the Baltic Exchange invites you to join market participants from across the physical dry bulk freight and FFA sectors to its annual Freight and Commodities Forum.
The forum will be taking place on 22 April at SGX Auditorium on Shenton Way.
Click here to register your interest and save the date.
- New Baltic Code
For the past year the Baltic – working with Norton Rose Fulbright – has been reviewing the Code with the aim of updating it to better reflect the compliance and operational challenges created by constantly evolving legal, regulatory and policy in all the jurisdictions where Baltic Exchange Members operate or do business.
The result has been written with input from both the Baltic Membership Council and the Baltic Exchange Council and reviewed by the wider membership.
“Our Word Our Bond” remains at the heart of what the Baltic Exchange and its global membership stand for, it also remains as the basis for the New Code.
The objectives of the New Baltic Code are to:
1. Preserve confidence in and the integrity of physical freight and freight derivative markets.
2. Establish and execute ethical business practices and eliminate poor practices in these markets.
3. Ensure the role of the Baltic Exchange remains at the centre of these markets.
Underpinning the New Baltic Code is set of universally accepted set of principles and good practices that will be applicable not only to Members but also to any physical freight and freight derivatives market participants.
It is therefore built around five key principals:
1. Integrity of Markets
2. Fairness and Competition
3. Ethical Business
4. Good Market Conduct
5. Robust and Credible Benchmarks
The New Baltic Code is now available on the Baltic website and will be applicable from 6 April 2020, giving time for members to acquaint themselves with it.
Read the new Baltic Code here.
- Using Baltic Exchange Data for Financial Settlement
You may have seen a recent advertisement placed by the Baltic Exchange across the shipping industry press, highlighting its data licence policy.
When Baltic Data is referenced for the settlement of contracts, every party to the contract is required to have a valid Baltic Data licence for the entire duration of the contract. This includes – but is not limited to – Time and Voyage Charterparties, Contracts of Affreightment (COAs), Commodity Contracts and Freight Derivative agreements (FFAs) that are not given up for clearing. Specifically, parties are required to have a Baltic Data licence that permits use of Baltic Data for settlement of contracts (“Settlement Licence”), rather than holding only a Level 1 or Level 2 licence, which does not permit such use.
A Baltic Data Settlement Licence can be obtained through:
- A Baltic Panellist- Baltic data is based on assessments made by Panellist Brokers and the easiest way to obtain a licence is to nominate a Baltic Panellist Broker in the contract. Every Baltic Panellist Broker is permitted by the Baltic Exchange to provide Baltic Data (including a Settlement Licence) to its clients in the segment/s for which the Panellist Broker supplies assessments to the Baltic. A copy of the recent advert including a full list of Baltic Panellists can be found here
- Alternatively, a licence can be obtained directly from the Baltic Exchange
To ensure that your company has the correct licence or to learn more about Baltic Exchange market information, please contact firstname.lastname@example.org.
- Baltic Exchange App
The Baltic Exchange has launched a new mobile App for Members and subscribers to its data.
Designed for Android and iOS operating systems, the app provides instant access to a wide range of Baltic information including rates, fixtures, Member contacts, news and much more.
Key features include:
- Live market data, including all historical Baltic indices & assessments and charts
- Live and historical FFA data, including forward assessments and volumes
- Push notifications for all Baltic spot data upon publication
- Member search facility. All company and individual contact details easily accessible
- Market intelligence including daily & historical fixtures, market reports, circulars and news
- Listings of all Baltic Exchange meetings, social and educational activities
Users can customise data notifications to receive the information they need as it’s published.
To sign up, you will need to register using your existing Baltic account here. Fill in the details using your personal corporate business email address.
The App is available only to members and subscribers to balticexchange.com – access is available to individuals who are registered with the Baltic Exchange as part of their corporate membership. If you have any questions, please do not hesitate to contact email@example.com
- Cycle for Seafarers
The Mission to Seafarers will be involved in two cycling fundraiser events this year. Details for both can be found here.
An atmospheric city ride to view London lights at night.
On 6-7 June 2020 Nightrider will once again take over London. Two routes will be available, a 100km and a 50km ride. Both are circular and start and finish at the iconic Lee Valley VeloPark.
More information and registration here.
London to Paris
A beautiful long weekend charity challenge from London to Paris, covering 300 km in three days, crossing the finish line at the foot of the Eiffel Tower.
Cycle from Crystal Palace towards Newhaven with sweeping views of the South Downs on the approach. Then set sail to France for two more action-packed days of cycling. Encounter historic towns, sleepy villages and rolling countryside en-route.
Experience the thrill of riding along wide boulevards and crossing the Seine to finish at the foot of the Eiffel Tower. Join this fantastic London to Paris cycle challenge and raise much needed funds for the charity of your choice.
More information and registration here.
- Baltic Exchange Quiz Night
Join us for the annual Baltic Pub Quiz on 13 February in the upstairs drinking rooms at the Lamb Tavern, Leadenhall Market.
Tickets are available in groups of 6, at £15 per person. Food is provided, with prizes including:
- A 2015 bottle Rathfinny Blanc de Noirs
- All expense lunch at The Baltic Bar and Restaurant
- The chance to win the Charles Macmillan Cup
- Points towards the David Bradley Inter-Sport Cup
This is a sell-out event, so attendees are invited to book ASAP to avoid disappointment.
Tickets are available here.
- The Baltic Exchange & ICS Lecture Series 3: Economics
The next Baltic Exchange/Institute of Chartered Shipbrokers lecture on the theme of economics will be taking place on 11 February in London and Athens. Topics range from: shipping cycles, current market trends and future drivers, globalisation and ship recycling.
The popular lecture series is aimed at building wider industry knowledge amongst younger chartering and operations staff and is free to Baltic and ICS Members, £100 for non-members. Drinks and refreshments are included.
Click here for further details and registration.
- Member Update: 22 January
The following company has applied for corporate membership:
Company Individual AltaGas Limited
Mr M Grohn Mr A Joncic
Mr M Little Ms R Merkel CMB International Leasing Management Ltd
Miss M Cao Honors Commodity Singapore Pte Ltd
Mr W Zhang
The following individuals have applied for membership of an existing member company:
Company Individual Howe Robinson & Co Ltd
Mr R Harland Mr T Johnson Mr M Knight Mr J Wackett MJLF & Associates Mr E Zavolas Navios Maritime Holdings Inc Mr G Zorzos United Chartering Ltd
Mrs N Schneider
Any comments should be passed to Karen Karanicholas by 29 January 2020.
- FFABA Tanker Freight Risk Forum
In a year where markets were resolutely focused on the long-anticipated IMO 2020 regulation, 2019 turned out to be one of the most volatile years on record for tanker freight. The extraordinary run of major incidents and vacillating geopolitical relations sent shock waves through the market causing the Baltic’s flagship TD3C route to peak at an unprecedented $300,000 per day in Q3.
Alongside increased safety risks and decision complexity for owners trading through the Gulf, freight risk exposure became an increasingly significant concern for commodity markets as traders ploughed volume into freight derivatives in a bid to mitigate risk and capitalise on rate volatility.
The Tanker Freight Risk Forum, hosted by the Baltic Exchange, supported by the FFA Brokers Association, is the annual market gathering for freight and oil traders globally. Taking place during IP week, attendees will hear from leading commentators including John Kemp from Reuters and Tim Smith from MSI as they share insights on tanker demand, supply and the outlook for both markets in 2020.
Alongside an update from the Baltic, traders and brokers will openly discuss market benchmark development alongside evolving trade patterns and other major industry issues impacting trade in both physical and FFA markets.
13:00 – Lunch Registration
14:00 – Market Developments and the Baltic Exchange: Mark Jackson, Chief Executive Officer, The Baltic Exchange
14:20 – Oil Markets: Fundamentals and outlook by John Kemp, Senior Market Analyst, Commodities and Energy, Reuters News
15:00 – Tanker Market Keynote: Tim Smith, Senior Analyst, Maritime -Maritime Strategies International
15:35 – Coffee break
15:50 – Market Issues Panel Session
- Chair: Adrian Wooldridge;Chair – Baltic Exchange Advisory Council – Wet
- Tom Stockton; Chair – FFA Brokers Association and Clarkson Platou Futures
- Vivek Srivastava; Shipping Industry Economist & Strategist
- Tim Smith, Senior Analyst; Maritime Strategies International
- Mark Jackson; CEO – Baltic Exchange
- James Pendered; Senior Freight Market Reporter – Baltic Exchange
16:30 – Drinks reception at The Clarence, Dover Street
Registration and further details here.
- The Baltic Exchange Irish Society Dinner
With over 400 attendees from across the globe, the Baltic Exchange Irish Society dinner is one of the best attended shipbroker events of the year.
The night opens with a drinks reception in the Porter Tun Room, before dinner in the Grand Hall. Toasts and speeches follow from the Chairman and guest speaker, before the traditional sing-along.
The event will take place at The Brewery (EC1Y 4SD) from 6pm on 12 March 2020. Tickets are now available at £95pp. For further details or to purchase tickets, please contact Irish Society Treasurer, John Ollett, firstname.lastname@example.org / 02071993497 / 07794 274 885.
- 4 February: Bunker Hedging Post IMO 2020
Taking place in Singapore, this half-day course is for bunker buyers, traders and suppliers wishing to understand how IMO 2020 may affect the hedging of bunker fuel prices as the ‘old’ contract disappear and ‘new’ ones emerge. Attendees will learn best practices in bunker fuel price risk management, using new low sulphur fuel oil contracts and gasoil contracts as well as basis risk between ports and how to manage regional discrepancies.
Bunker risk management essentials:
– The economics of a bunker hedge in a COA and for bunkers on redelivery
– Classic signs of when to hedge and when to float on the spot market
– Tried and tested hedging strategies – practical examples
– How IMO 2020 changes bunker hedging, and why
Hedging bunker price exposure with new contracts:
– Term structure and oil market dynamics
– The new low sulphur fuel oil contracts, market mechanics post 2020
– Low sulphur marine gasoil contracts
– Basis risk and regional price differentials, best practice hedging
– New hedging strategies – practical examples
– Execution,clearing, collateral and cash management
The course is charged at USD 600 / SGD 800, with discounts for multiple bookings available on request.
To find out more, or to book, click here.
- 5 February: Managing LNG Freight Risk Using Futures
Taking place in Singapore, this half-day classroom style course is aimed at commercial and risk executives in the LNG market as well as ship operators and ship finance professionals. The course is also suitable for shipbrokers and financiers wishing to expand their knowledge of their clients’ business.
The Baltic BLNG Index:
– Comprehensive understanding of the BLNG Baltic Index and Index methodology
– The role of panels and integrity of the market
– Pricing of the Index on time charter and voyage charter
– Calculating ‘Basis Risk’ between the LNG Index and main LNG trading routes
– Index Settlement mechanisms and correlations
– Term structure of the LNG forward curve
– Contango, backwardation, inversions and seasonality
Putting it all together with FFAs:
– Composition, construction and use of an LNG FFA derivatives contract
– Practical application of LNG FFAs to freight contracts and time charters
– Calculating pricing risk, calendar risk and cash flow
– Settlement mechanisms
– Leverage and Margining and mark-to-market
– Stress testing
– Examples and practical uses of an LNG FFA contract
The course is charged at USD 600 / SGD 800, with discounts for multiple bookings available on request.
To find out more, or to book, click here.
- Make room for LPG as a marine fuel
In the race to take first place in the competition for shipping’s best alternative to high sulphur fuel oil, much has been made of the advantages of liquefied natural gas (LNG).
Rather less noise has, however, been made about its heavier cousin, liquefied petroleum gas (LPG). But it looks like that imbalance is set to be redressed.
LPG is readily available globally and is lauded as a clean, energy efficient and portable fuel with an affordable price tag. It’s currently sourced mainly from natural gas and oil production activities. However, in the wake of new technologies and techniques, LPG can also be produced from renewable sources.
As a mixture of propane and butane its density is higher than that of air, which means that in the event of leakage vapours will accumulate in the lower portion of the surrounding space. That means that it requires a different approach to leak detection and ventilation than LNG. LPG also has a lower flammability range, with a lower explosion limit of 2%.
On the upside, LPG is less challenging with regard to temperatures since it has a higher boiling point and, unlike LNG, is not stored at cryogenic temperatures.
The World LPG Association (WLPGA) is clear on LPG’s growing applicability to shipping. Its recent ‘LPG Bunkering – Guide for LPG Marine Fuel Supply’ report found that LPG is a key enabler for IMO’s 2050 regulation which calls for a reduction in total annual greenhouse gas emissions by at least 50% by 2050 compared with 2008.
LPG is already becoming the preferred fuelling solution for LPG carriers. For other ships, a rethink is called for on design, regulations, safeguards and safe practices, and operational processes and training to make LPG viable as a marine fuel. But taking all that into consideration, there is said to be great potential for the product in the shipping industry.
“With the marine industry under pressure to take measures to reduce emissions to comply with IMO 2020, LPG can make significant inroads into the marine fuel market,” said the WLPGA. To achieve that, LPG propulsion, starting with the LPG carrier sector, needs to move beyond a niche fuel option, to gain the acceptance in the wider shipping sector that it deserves.
Progression could be fast-tracked by the fact that infrastructure for distribution and bunkering is already largely available to serve potential marine market demand; other alternative fuels need infrastructure to be developed.
While LPG might be a relatively new marine propulsion fuel, it is a fuel that the shipping sector knows well through its more than 50 years of storage, transport and handling experience.
“Supplies are also abundant, especially due to increased production coming from the US,” said the Association. “LPG bunkering can take place in various ways, from terminals, refineries, on-shore trucks, smaller LPG carriers or barges. There are more than 1,000 LPG storage facilities around the world that can be used for LPG bunkering, and more than 700 small size LPG carriers, that can be used for ship-to-ship bunkering.
The WLPGA expects greater economic incentives to be offered in the future to attract more ship owners and operators to invest in LPG fuelled fleets.
Henry Cubbon, president of WLPGA, said: “As a vision, I want to see LPG positioned as a relevant fuel for the future with a recognised role in the decarbonisation of our planet. The key challenge is the drive to decarbonise our planet and how we position LPG as part of the solution and not the problem.
“Our opportunity is the fact that LPG is a decarboniser. Across many parts of the world LPG has replaced biomass as a source of cooking fuel leading to significant health benefits. LPG has also replaced other fuels such as heating oil in residential properties and other fuels used by businesses and agricultural enterprises.”
DNV GL shares the WLPGA’s enthusiasm for LPG as a ship’s fuel. It has developed new class rules and a class notation for “Gas fuelled LPG” ships in anticipation of growing industry interest. Currently, there are no international rules for LPG as a fuel.
“With the new rules and class notation, we want to offer owners interested in LPG a straightforward path towards compliance with the alternative design approach mandated by the IGF Code,” said Geir Dugstad, director of ship classification and technical director at DNV GL – Maritime. “As the fuel environment within the maritime industry becomes more diverse, it is essential that we continue to broaden the enabling rules and regulation to support these new choices.”
The rules and notation are based on DNV GL’s rules for ships using LNG as fuel but account for the differences in properties and phases between LPG and LNG. The ‘Gas fuelled LPG’ notation covers internal combustion engines, boilers and gas turbines for both gas-only and dual-fuel operations. It also includes requirements for a ship’s fuel supply, considering all aspects of the installation from the bunkering connection up to and including the LPG consumers (main and auxiliary engines, boilers, etc.).
LPG promises lower emissions, both in terms of greenhouse gases and other pollutants. It virtually eliminates sulphur emissions and reduces GHG output by approximately 17% compared with burning HFO or MGO. DNV GL adds that LPG could also act as a bridging fuel to ammonia, as the materials used for LPG tanks and systems are, in most cases, suitable for ammonia.
“A joint study of DNV GL and MAN evaluated that LPG is at least as attractive an energy source as LNG, with shorter payback periods, lower investment costs and lower sensitivity to fuel price scenarios,” said Torill Grimstad Osberg, head of section LNG, cargo handling and piping systems at DNV GL.
One shipper has taken the leap and opted for LPG-fuelled ships: BW LNG is retrofitting four of its fleet to enable them to burn LPG as part of their fuel mix. While BW LPG has been burning LNG boil-off for fuel for decades, LPG carriers have been re-liquefying the boil-off and returning it to the cargo. However today there is a case greater use of LPG as a fuel because of economic and industrial developments.
Indeed, declining LPG prices due to shale gas production, and increasingly stringent environmental regulations means that LPG is coming into its own.
Pontus Berg, executive vice president technical and operations at BW LPG, said: “As a company, BW LPG is also looking for ways to reduce our carbon footprint, which LPG as a fuel offers. Burning of LPG in our retrofitted ships also reduces the numbers for PM, NOx, SOx and CO2, which allows us as a company to play our part for future generations.”
The Baltic Academy’s Bunker Hedging Post IMO 2020 course will take place in Singapore on February 4, 2020: https://www.balticexchange.com/other-services/training-2/bunker-hedging-post-imo-2020/
- Alexander J Macfarlane
Members will learn with deep regret of the Alexander J Macfarlane on Thursday 9 January 2020.
Mr Macfarlane was first elected a Member of the Baltic in 1971. He represented Angus Graham & Partners LLP between 1982 and 2006, Ravenscroft Shipping (1986-1993), and E A Gibson Shipbrokers Ltd (1994-1997). Mr Macfarlane was also a Baltic Retired Member.
There will be a Memorial Service for Alexander McFarlane on Saturday 1 February 2020 at St Andrews Church, Letcombe Regis, Wantage, Oxon OX12 9JS.