Global Commodities Newsletter | June 2020
EEX – No.1 in Dry Freight Trading WORLDWIDE
2020 has been quite a year for #TeamFreight here at EEX Group.
In March, we became the majority shareholder of Open Interest in the Dry Freight market and in the following months, we have continued to build upon this success to grow our share of Open Interest to 54%. Last month, EEX achieved another record in Freight by gaining the majority share of volume in the Dry Freight market for the first time since launching the business in 2016. Throughout the month of May, EEX achieved a 50.5% volume share of the Dry Freight market (3.48% : May ’19) in addition to a 54% share in Open Interest (7.73% : May ’19) thereby overtaking the market leader as the No.1 exchange in dry freight trading worldwide!
Over the past 18 months, our Freight business has seen consistent and significant growth, achieving a year on year increase of +109% in 2019. Furthermore, in the first quarter of 2020 (Jan-Mar), overall volumes exceeded the volume generated in 2016, 2017, 2018 and 2019 combined! This period of sustained organic growth in addition to the migration of Freight Open Interest from Nasdaq Futures, Inc. (NFX) has resulted in EEX emerging as the leading exchange in global freight trading.
Of course, none of this would have been possible if it wasn’t for the amazing support we have received. When we launched the Freight business in 2016 we had a vision – to become the No.1 Exchange in Dry Freight Trading worldwide. It’s been an amazing journey so far, with many twists and turns along the road, but 4 years later, our vision has become reality.
Business as Usual
Since the outbreak of COVID-19 around the world, the past few months have been anything but “Business as usual” for any of us. However, our Business Development and Group Strategy teams have been busy and remain committed to building new products and services for the freight market, in addition to continuing to work on a range of new initiatives.
To find out more on our future plans and what’s in the Freight pipeline, check out the latest video from Richard Heath - click here
Email: Richard Heath
The power of The Portal
As the gateway to our Global Commodities business, the Portal is integral to EEX Group’s success. Performing a number of key functionalities in addition to offering a significant range of added value services, the Portal is an integrated web-based solution which was developed by EEX Asia and our sister company KBTech.
Its core function is a matching and trade entry system. Customizable for different users, the Portal provides brokers with an interface to enter EEX trades, clearing members the ability to manage pre-trade risk, trading members the option to view brokered trades, and all users the opportunity to view real-time trade status and extract historical information. Being web-based, the Portal provides the additional advantage of giving participants the ability to quickly access market transactions through the Trade Tape function, track their EEX Freight Portfolio and even view analytics such as initial margin requirements across freight products.
As an integrated solution via an open API, the Portal allows connectivity both upstream to market makers or other trading software as well as downstream to trading and clearing members’ risk management or operational processing systems.
To find out more on the Portal’s functionalities, click here to view our latest demo video.
Maritime Fuels Hedging – how will the market evolve in the wake of IMO 2020?
EEX Group’s robust portfolio of freight derivatives now count close to 290,000 time-charter days’ worth of theoretical freight capacity. In the physical shipping market, the equivalent fuel demand for this exposure aggregates to almost 11 million metric tonnes of heavy fuel oil, based on an average fleet speed of 12 to 14 knots, and the respective fuel consumption profiles of each vessel size.
Given the large proportion of heavy fuel oil being consumed in deep sea shipping, and fuel costs’ large impact on a vessel owner/charterers’ economics, it is natural that fuel oil hedging has become second nature for most freight market participants. However, new regulations on sulphur emissions have upended old market conventions on how to deal with maritime fuel price risk, and many options have developed, each carefully balancing liquidity and basis risk considerations. EEX is now inviting our clients to have your say in how this market looks in a post-IMO 2020 world.
To address these issues we kindly ask for your input, and in this regard we have developed a short 5-minute survey that will help us understand your needs and preferences in marine fuel hedging.
The survey can be found below and can be answered anonymously. If you would like to see the overall results of this survey, please leave your name and email address, and we will get back to you with the conclusions.
Thank you very much for helping EEX become a true one-stop shop for all things shipping!
Email: Erlend Engelstad
Market Insights: Global Commodities wasn’t built in a day
The competitors’ landscape of FFAs and options freight clearing in the dry bulk market has changed dramatically in the past years. The move from a partially bilaterally traded OTC contract market to a virtually 100% cleared market, in addition to increases in regulatory reporting have seen a number of exchanges come and go over the past decade. Against this backdrop, EEX Group entered the Dry Bulk Freight sector in late 2016 with a clear mandate to become a major force in global freight trading. To gain an insight into this market and more importantly, how EEX Group came to be No.1 in dry freight trading worldwide, read our latest Market Insights study which explains the story so far…
To read the full Market Insights – click here
Contact: Claudia Gerotto