- Baltic Exchange Freight and Commodities Forum: Hamburg
The Baltic Exchange invites Members to its Freight and Commodities Forum in Hamburg on 17 October at the Sofitel Hotel Hamburg Alter Wall.
The event will include discussion and analytical insight from leading industry figures on bulk commodity freight flows, supply-side forecasts, regulatory changes and the bunker spread outlook. Hosted by the Baltic Exchange and including an update on our benchmarks and services, this conference is open for all market participants to attend.
13:00 Registration: Networking lunch
14:00 Baltic Exchange Update: Mark Jackson – CEO
14:20 FFA Market Update – John Banaszkiewicz, Chair – FFA Brokers Association (Dry)
14:25 Bulk Commodities and Demand Side Outlook: Capt. Amrit Singh – Lead Shipping Analyst, Refinitiv
15:00 Freight Market Outlook Keynote: James Frew – Director of Consultancy, MSI
16:00 Industry Sessions; rotating break out discussions covering:
- Session A: Supply-Side Dynamics; meeting demand: Led by Chris Hughes – Global Lead, Shipping Markets – Lloyd’s Register with Amrit Singh.
- Session B: Price Discovery; indexation, use of indices and minding the gap: Led by Philippe van den Abeele, CIO – Consortium Capital Management with James Frew.
- Session C: Doubling Dry FFA Volumes and Building Route Liquidity: Led by John Banaszkiewicz, MD, Freight Investor Services with the FFA Brokers Association (Dry).
17:00 Industry Sessions Feedback Panel
18:00 Drinks & Dinner hosted by the FFABA DRY @ VLET an der Alster
- YBA night: Hamburg
The event is open to shipping market participants in Hamburg as well as those attending the Forum.
Attendees are invited to join us from 6pm.
Address: Hörsaal Hamburg Talstraße 12, 20359 Hamburg
- First Atlantic LNG freight swap trade
LNG traders JERA Global Markets and Vitol have executed the first Atlantic LNG freight swap against the Baltic Exchange’s BLNG3 assessment in a bilateral trade arranged by Affinity Financial Products.
The BLNG3 assessment provides a freight rate benchmark for LNG shipments between Sabine Pass and Tokyo. The benchmark is on a time charter equivalent basis with a panel of independent shipbrokers providing headline time charter rates and a ballast bonus and/or position fee assessment to give an effective rate paid by a charterer on round voyage terms.
“Following on from our initial trade in July when the Baltic’s BLNG1 assessment went live, we are very pleased to have been able to arrange a bilateral trade against the BLNG3 route,” said Benjamin Gibson, Head of LNG Derivatives at Affinity. “Interest in BLNG3 has been off the charts as this trade lane links an increasingly liquid spot market in the Atlantic and the key demand centre for LNG in Japan. As the LNG market continues to commoditise, freight is now catching up with the cargo in terms of transparency and the ability to trade BLNG3 will become an important tool along with JKM and Henry Hub.”
Baltic Exchange Chief Executive Mark Jackson added: “Our BLNG3 route only went live in mid-August and we’re delighted to see the first trade settled against it. The Baltic’s LNG assessments are being quickly adopted by this developing market as an accurate and reliable benchmark.”
Sarah Behbehani, JERA Global Markets SVP LNG commented: “As part of JERAGM’s efforts to increase the transparency of the LNG market, we are very happy to confirm that we have concluded the first LNG freight swap against the Baltic Exchange’s Sabine Pass to Tokyo index. The management of LNG freight price exposure is a key element of portfolio optimisation and risk management, however LNG freight derivatives have been slower to develop compared to LNG and gas-linked financial products. Freight exposure arising from US LNG is of particular importance for the development of the market, given the US Gulf Coast’s position as a marginal source of supply across the Atlantic and Pacific basins.”
Affinity confirmed that the trade was done over-the-counter (OTC) and executed bilaterally using an ISDA contract.
Gibson added that “further bilateral trades will help develop the understanding and adoption of freight benchmarks within the industry. We are delighted to have supportive counterparties such as JERA and Vitol who will transact on this basis and, furthermore, the market is engaged with several Exchanges who have expressed an interest in listing contracts priced against the Baltic routes.”
Click here to view Baltic Exchange LNG data.
- Member update: 2 October
The following individuals have applied for membership of an existing member company:
Company Individual Howe Robinson & Co Ltd Mr M Matthaiakis Optima International Shipbroking Services SA Mr D Skottis The Air Charter Association Ltd
Mr S Fries
The following has applied for Retired Membership:
Mr S Wolage
Any comments should be passed to Karen Karanicholas by 9 October 2019.
- 2020 Baltic diaries now available to order
Baltic diaries and pocket diaries for 2020 are now available alongside other items via the Baltic’s online shop.
- Money makes the world go green?
“It’s only a matter of time — and it’s already happening to an extent — [until] shipowners will find it increasingly difficult to get finance for their ships unless they have green credentials,” Bob Sanguinetti, chief executive of the UK Chamber of Shipping, told an assembled audience at a conference organised by the UK branch of the Women’s International Shipping & Trading Association on the first day of London International Shipping Week 2019 (LISW19). Perhaps while saying this, his mind was on the Poseidon Principles — the new “global framework for responsible ship finance” which has attracted much attention since it was launched in June this year.
The principles, established by 11 banks (including Citi, Societe Generale and ING) representing around $100bn in shipping finance, see those who sign up to them commit to integrating climate considerations into decisions on lending. According to the website for them, the values create a common, global baseline to quantitatively assess and reveal whether financial institutions’ lending portfolios are in line with adopted climate objectives. The site claims that “they set a benchmark for what it means to be a responsible bank in the maritime sector”.
A sea change
Such is the spread of the concept of ‘green finance’ — defined by the International Trade Centre as including all initiatives taken by public and private agents in developing, implementing, supporting and promoting projects with sustainable effects through financial tools — within the shipping sphere, one of the world’s biggest law firms has seen it fit to pass comment. In an article published in September about green, or sustainable, financing in the shipping and offshore industries, Norton Rose Fulbright says that more and more, banks and financial institutions must justify their investment decisions on the basis of sustainability and environmental risk. The law firm explains that while the Equator Principles, first launched formally in 2003, have applied to particular asset finance transactions for some time, a heightened focus on sustainability measures within financial institutions and banks, the Poseidon Principles’ founding, the introduction of the Loan Market Association’s Green Loan Principles and the bringing in of the Sustainability Linked Loan Principles are all leading to a shift in focus.
“With regulatory changes and increased public focus on environmental matters driving change in the shipping and offshore industries, and certain capital providers available and willing to finance that change, there is scope for the right projects to receive financing at the right price,” Norton Rose Fulbright says. “If this mixture of regulatory impetus and technological and financial ingenuity leads to a greener and more sustainable shipping and offshore industry, we will all benefit.”
Green finance … isn’t the silver bullet
According to the law firm, one driver for financial institutions and banks to extend green or sustainable loans is the possible ability to have access to a new kind of investor base through the capital markets. Green or sustainable bonds can be issued — the difference from conventional bonds with these is that the issuer offers a set of green, or sustainable, criteria and then undertakes to use the capital raised for initiatives falling within this criteria. Consequently, banks and financial institutions might have capital designated purely for green or sustainable projects. Deploying this capital, Norton Rose Fulbright notes, can need third-party views to confirm the expenditure adheres to the criteria. At present, the EU is developing legislation on the criteria.
If a project fails to achieve the desired result and thus does not match up to the criteria for the bond, an investor might argue that they have been misled by the issuer. Consequently, the bank or financial institution will need any initiative it invests in which uses such funds to report frequently and will set tough criteria to make sure it stays adhering to any green or sustainable bond’s terms. Norton Rose Fulbright also claims that a developing trend is the economic incentivisation of better sustainability performance. The law firm anticipates that this trend will carry on as sustainability and the environmental effect of the shipping and offshore sectors gain ever-bigger focus.
The finance factor
During LISW19, Andy Dacy, global head of J.P.Morgan’s transportation group, told of the influence the environment now has on institutional investors.
“There is not one institutional investor in the West that is not thinking about the environmental, social and governance (ESG) agenda and the ESG status of their investments,” he claimed. “The reality is that the largest pools of capital have made sustainability a priority. These issues may not trickle into your business straight away, but capital moves the market and chief information officers or finance executives are all thinking that way.”
Unsurprisingly, the Poseidon Principles were also a topic of discussion during LISW19. Michael Parker, chairman for shipping and logistics at Citi and chair of the drafting committee for the values, took part in a panel discussion entitled “The New Financing Realities” during the International Chamber of Shipping’s 2019 Conference, which was hosted during the week. He said that the principles are “very much supporting the International Maritime Organization’s direction” and mentioned the role of capital in helping generate environmental change.
Elinor Dautlich, HFW Partner, noted that currently, the values are lacking input from Asia, although her organisation is anticipating that this will come in the future. She also said that some geopolitical issues exist. On a different note, Rhian-Mari Thomas, chief executive of the Green Finance Institute, wanted to pick up Mr Parker’s point about “finance being the facilitator of the transition, as opposed to being the stick”.
“Green finance … isn’t the silver bullet,” she said. “It’s certainly not ‘the green bullet’. It is a facilitation mechanism.”
The perspective, Ms Thomas noted, is shifting from one of “green good, brown bad” to looking at a gradation of risk. Green bonds, she said, have existed for a decade and excluded higher-emitting and harder-to-abate sectors from getting hold of this kind of capital. However, what is happening with green now is a gradation of risk and a gradation of opportunity that over time is set to witness an alteration in the cost of funds.
“That’s not something to be afraid of,” she explained. “It’s a transition, and it needs to be done in a collaborative way between industry, policymakers and the financier.”
The chief executive also said that green finance isn’t “magic finance” — it still needs rigour and credit, and repayment is still required. However, she called for getting financing into high-emitting and harder-to-abate fields, having additionally noted that banks and other financiers are increasingly set to demonstrate the amount of their book “on a transition trajectory”.
It remains to be seen whether green finance will be the driver of a transition to a more environmentally-friendly shipping industry.
The Baltic Exchange will hold its next Ship Finance Executive course on November 11 and 12 in UK capital London. More information can be found here.
- An evening with Paralympic sailor Hannah Stodel
Co-hosted with HFW at their London office, BESA is delighted to invite its members and the wider Baltic Exchange community to a special presentation on Wednesday 9 October given by British Paralympic World Champion, Hannah Stodel. Hannah will share the inspiring story of her success and discuss the next challenge she has set herself: to become the first disabled sailor ever to take on the Vendée Globe. Racing 24,000 miles around the world – nonstop and without any assistance – Hannah plans to set three major records along the way.
Registration for the event begins at 5.15pm, presentation at 5.45pm and networking over drinks and canapés at 6.30pm.
About our speaker
Three times World Champion and four times Paralympian, Hannah Stodel was born missing her lower right arm but she is a force unto herself and it has not stopped her from competing in able-bodied competition. Besides her three World Championship titles and scores of other results and awards, she’s been the global leader for reinstating disabled sailing into the Paralympic games and is an ambassador for Ditch the Label (anti-bullying) charity in London. With a fierce determination, Hannah is now undertaking the greatest challenge yet, her personal “Everest of the Seas” by competing in the Vendée Globe. We very much hope you can join us for what should be an interesting and inspiring event.
Please RSVP if you wish to attend (including your intended number of guests) to Philip Bacon (firstname.lastname@example.org). Alternatively please contact Amanda Hastings, BESA Social Secretary, (email@example.com) or Camilla Robertson at HFW (firstname.lastname@example.org).
- BEGS Company Cup 2019
This year’s Baltic Exchange Golfing Society Company Cup will be held on Friday 11 October at West Herts Golf Club.
The event is open to teams of two shipbroking golfers. The best combined Stableford score will be the winner.
The Company Cup format is pretty simple, but has a few minor rules:
- Teams of two, competing in four-balls over one round.
- Stableford scoring system, with the combined score counting to each two-person team.
- Each team does NOT have to consist of employees from the same company, clients/visitors are very welcome.
- Teams can be two principals from the same company or different offices, or a principal and a broker or two brokers.
- There is no limit on the number of teams any one company wishes to enter, the more the merrier.
- Baltic Exchange is sponsoring the hole in one on the Par 3’s, with a main prize of a car and other prizes on the rest
- There will be additional prizes for nearest the pin, longest drive in the rough and longest drive on the fairway.
- Official handicap certificates are not required, but anyone playing off 24 or higher that does not have an official club handicap cannot score more than 30 points.
- This event can contribute as one of the sports for the overall David Bradley Cup winner.
Anyone interested in registering for the Company Cup, please contact James Pendered, it will be on a first-come-first-served basis.
Format (all times are approximate & subject to change)
Noon – Arrival time, bacon roll & coffee
13:15 – Tee off for 18 holes from the first tee
18:30 – Drinks/prize giving during dinner
The cost will be £80/player
Herts WD3 3GG
Telephone: 01923 236484 / Pro Shop: 01923 236866