UK ship broking firm confirms first LNG freight futures trade

Tuesday, 14 January 2020
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Clarksons, the London-based ship brokers and shipping and financial services company, said it had completed the world’s first LNG freight futures trade at year-end involving two of the leading global commodities traders.

The brokers said the trade was competed in late December on the CME Group trading platform by their Clarkson Platou Futures Ltd unit.

The trade was between the international commodities firms Vitol and Trafigura.

The London-based Baltic Exchange collects data from shipping brokers to provide assessment of three routes on the CME.

These are from Australia’s Gladstone port in Queensland to Tokyo, from the US Sabine Pass LNG plant in Louisiana, owned by Cheniere Energy, to the UK. A third freight contract is from Sabine Pass to Tokyo.

There have been several over-the-counter (OTC) deals via brokers based on the Baltic Exchange’s assessments, including between French major Total and commodities firm Glencore in July 2019 and Japan's JERA Global Markets and commodities firm Vitol in September.

However, the Vitol-Trafigura trade was a first and involved a first-quarter 2020 spread between BLNG1 Gladstone (Australia) to Tokyo RV and BLNG2 Sabine (US Gulf) to Isle of Grain RV (UK) taking place just hours after the product’s launched by CME on December 23.

“We have seen an increase in demand from market participants wishing to manage freight exposure within LNG,” said Christian Greenop, who led the transaction from the Clarksons FFA team.

“In 2019, 160,000 cubic metres capacity TFDE tonnage traded in the single voyage market in the low $10,000/day RV basis during April and broke the $170,000/day RV basis mark in October, so a risk management tool is particularly useful given this level of volatility,” stated Greenop.

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