London: Shipping’s recovery looks “pretty firm”, according to John Banaszkiewicz, managing director of derivatives broker Freight Investor Services (FIS).
The first quarter seemed to surprise almost everyone in the market with the strength of the improvement, says Banaszkiewicz. There were some indications from last year that the fundamentals were improving but the extent of the market’s rise and its effect on the paper market was, he says, “dramatic”.
Banaszkiewicz reckons that the dry bulk sector was undervalued for so long that it was overdue for a recovery in both sentiment and in terms of supply/demand balance.
“As a result,” he says, “derivatives came back into their own as a means to hedge freight risk or take advantage of the increased volatility.”
The second quarter, thus far, has slowed down, Banaszkiewicz says, as the market tries to digest what will happen next with China’s economy.
“The steel industry there is highly political,” he observes, “so when we see announcements we have to wait and see what actually happens. What is clear is that the appetite for derivatives trading in China is continuing to grow so our challenge is meeting that demand.”
Still, as a derivatives broker FIS tends to be busy whichever way the market moves.
“To some extent the direction is less important to us than the volume,” Banaszkiewicz explains.
FIS has won many awards for its innovative products, but Banaszkiewicz is keeping quiet on new products to be rolled out for fear they will be poached by rivals.
“As the leading broker in our markets,” he says, “we have to be very careful about what we say ahead of new launches because there are plenty of brokers out there who like to piggyback on our groundwork and try to take a slice of the business. That’s a fact of life, but for our customers the difference is that we bring them first mover advantage and open up new opportunities for them to trade.” [12/05/14]