The Baltic Exchange will be making significant amends to the Baltic Capesize Index including a change to its vessel description, amends to the route weightings and the addition of three new routes.
The move follows a formal consultation process with the dry bulk market which began on 11 October 2013. Trial reporting on the new routes and vessel description will begin in late January/early February with a lifting of the trial anticipated by the end of March 2014. The existing routes and new routes will be published side-by-side until there is no further open interest in either Forward Freight Agreements (FFAs) or options to be settled. This vessel will routinely be referred to as the Baltic Capesize 2014.
The basis of the new Baltic Exchange capesize vessel description will be:
180, 000mt dwt on 18.2m SSW draft
Max age 10 years
198, 000cbm grain
LOA 290m Beam 45m
15 knots ballast/14 knots laden on 62mt fuel oil (380 cst), no diesel at sea.
When considering the prevailing timecharter market rate for the Baltic Capesize 2014 vessel, panellists should assume that, if steaming at 12 knots laden or 13 knots ballast, the vessel will consume 43mt fuel oil, no diesel at sea.
The following new routes will be launched:
Delivery Qingdao spot or retroactive up to a maximum 15 days after sailing from Qingdao, round voyage via Brazil, redelivery China-Japan range, duration 80-90 days. Basis the Baltic Capesize 2014 vessel. 5% total commission
Richards Bay-Guangzhou. 150, 000mt coal, 10% more or less in owner’s option, free in and out trimmed, scale load / 30, 000mt Sundays + holidays included discharge. 18 hrs turn time at loading port, 24 hrs turn time at discharge port. Laydays/cancelling 25/35 days from index date. Age max 15 yrs. 5% total commission.
Delivery north China-south Japan range, 3-10 days from index date for a trip via Australia or Indonesia or US west coast or South Africa or Brazil, redelivery UK-Cont-Med within Skaw-Passero range, duration to be adjusted to 65 days. Basis the Baltic Capesize 2014 vessel. 5% total commission.
Principals with substantial interest in route C16 have agreed to provide detailed fixture information on a regular basis to assist with the reporting of the route. This data will be held confidentially by the Baltic.
The timecharter average figure provided by the Baltic to facilitate both the FFA and physical market will be weighted as follows:
Route no Description Weighting
C8_14 Transatlantic RV 25%
C9_14 Fronthaul 12.5%
C10_14 Pacific RV 25%
C14 China-Brazil RV 25%
C16 Revised backhaul 12.5%
Parallel reporting of the old and new suites of timecharter routes will continue until there is no further open interest in either Forward Freight Agreements (FFAs) or options to be settled.
Once the new contract has been launched, clearing houses will not accept trades on the old contract which extend in date beyond the period for which there is existing open interest. They have also agreed to offer cost incentives to assist those who wish to migrate open interest to the new contract.
New weightings for the Baltic Capesize Index routes will be announced shortly.
Baltic Exchange Chief Executive Jeremy Penn said:
“These are significant alterations which will impact traders, owners and charterers and are designed to reflect the realities of a changed dry bulk marketplace. We have received a large number of written comments, held open meetings with members and stakeholders in Singapore and Geneva as well as held face to face meetings with key market participants.”
He noted that not all changes initially proposed by the Baltic had been accepted by the market.
“Feedback from the market showed strong support for the Baltic continuing to report on both routes C4 (Richards Bay-Rotterdam voyage) and C2 (Tubarao-Rotterdam voyage). We will continue to report C4 for as long as is practical and C2 on an indefinite basis.”
Welcoming the changes, Chairman of the Dry Freight Market Information Users’ Group, Philippe van den Abeele said:
“This is a significant realignment of the Baltic Exchange’s capesize information and a change which is being implemented in very close consultation with the end users of the Baltic’s information. We recognise the breadth of opinion in the market and thank the Baltic Exchange for undertaking such a comprehensive review, bringing in as many participants as possible. This exercise has resulted in a better suite of information for the capesize market.”
FFA Brokers’ Association Chairman Ed Radcliffe said:
“After a lengthy period of consultation with market participants the prevailing view is that the changes to the Baltic Capesize Index better reflects the underlying physical market and the FFABA will, of course, continue to work with the Baltic Exchange and the FMIUG to ease the transition to the new index.”
The changes to the index will not result in any changes to the Baltic Exchange’s reporting methods. However, panellists will be provided with a calculation tool to assist them in reviewing the relationship between existing timecharter routes and those based on the new 180, 000mt vessel.
The Baltic Exchange is the world’s only independent source of maritime market information for the trading and settlement of physical and derivative contracts. Its international community of over 600 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic.