April was the busiest month of the year for the dry bulk freight derivatives market.
Figures compiled by the Baltic Exchange showed that more than 140,000 lots were traded in the forward freight agreement (FFA) and options markets, a 60% year-on-year (y/y) increase on average volumes for the first three months of 2015.
Trade in Capesize options was significant, with 40,260 lots traded, compared with 4,050 Panamax options and 120 Supramax options.
There were 99,625 FFAs traded, bringing the total traded lots for April to 144,055.
Baltic Exchange CEO Jeremy Penn said, “Unlike previous rises in the FFA market, this has come against a backdrop of very low spot rates in the physical shipping market. Much of the rise was driven by a surge of interest in Capesize options, 40,000 of which were traded in April.”
The Baltic Exchange’s electronic trading platform, Baltex, which provides a block trade facility for brokers to report trades being cleared at LCH.Clearnet, saw more than 66,000 lots reported via its systems.
On 4 May, the Singapore Exchange (SGX) also reported significant trade for dry freight derivatives in April, with significant interest in Capesize options.
The number of dry bulk freight contracts traded via the SGX jumped 700% y/y to 14,154 contracts in April.
An SGX spokesman told IHS Maritime, “A combination of higher iron ore volatility, iron ore supply uncertainties, improving demand sentiment, as well as a drop in freight rate volatility likely contributed to higher interest in Capesize freight derivatives in recent weeks, and options contracts in particular.”