Baltic bows to China with index changes

London: Such is the nature of world shipping that increasingly everything the venerable Baltic Exchange does these days is in reaction to China. Chastened by both the growth of the Shanghai Shipping Exchange and a planned new iron ore rate index from Platts, the London institution has announced “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.  

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 
with a maximum age of 10 years

Also reflecting China’s dominance of the cape trades, the following new routes are to be launched by the Baltic Exchange:

 Brazil – Qingdao; Richards Bay – Guanzghou; north China – south Japan.

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.”

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.”


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