China factor helps drive freight derivatives

Discussion in 'Commodity Futures' started by ASusilovic, Oct 15, 2007.

  1. Bankers and hedge fund managers are increasingly turning to the nascent world of freight derivatives, as figures to be published today show the market is on course to hit a record $150bn (£74bn) in value – a 200 per cent increase on last year.

    With volumes in many other derivatives markets, such as credit default swaps, hit by the liquidity crunch, freight derivatives have, by contrast, experienced a big surge in business as a result of the booming Chinese manufacturing sector, which requires raw materials.

    http://www.ft.com/cms/s/cc6b596c-7a...c.html&_i_referer=http://ftalphaville.ft.com/
     
  2. zdreg

    zdreg

  3. The freight "indices" tend to correlate strongly to crude oil.
     
  4. What do you mean by "indices" ?

    Check this site =>

    http://www.imarex.com/imarex_markets/freight_derivatives

    * 20 day volatility up to 70%
    * Volatile asset values directly tied to freight rates

    Nice vola....:D
     
  5. I thought there were some freight contracts that traded in Europe....Baltic? It seems their volatility is a by-product of the underlying commodity's volatility.
     
  6. Steve_IB

    Steve_IB Interactive Brokers

    Most of the turnover in freight derivatives is OTC. But the Baltic indices are useful for gauging direction, and also tend to lead commodity prices.. which makes sense if you think about what they are.

    Not sure of any free online resources, as most of the data is given out by the shipping brokers such as Clarksons, and is password protected on their website.

    On Bloomberg you can see Capesize, Panamax, Handymax, Dry, indexes (Bloomberg codes BCIY, BPIY, BDIY, BHIY, etc.). Very volatile charts..