FIS in the News

Read John B's article in leading Indian mining publication about the challenges facing the global steel industry and how the FIS Virtual Steel Mill can help producers, traders and end-users overcome price risk in their supply chains.

A leading freight trader claims freight futures are a 'back to basics' tool for a volatile market.

Tradewinds' Geoff Garfield rounds up the recent FFABA seminar in London and asks whether the market can square the circle of transparency and liquidity while adapting to a new regulatory landscape.

Banks and hedge funds seeking higher returns in commodities-related investments are trading record amounts of freight options as volatility in shipping surges, according to Freight Investor Services Ltd.

THE volume of capesize forward freight agreements traded in the past two weeks have been at the highest levels seen since June 2010, as surging charter rates in August prompted a "frenzy" in the paper market.

Futures guru John Banaszkiewicz has questioned whether the Baltic Exchange can ever make money through its new Baltex forward freight agreement (FFA) screen-trading system amid a "very bad" market and what he claims is wariness of the new system among brokers.

FIS says alternative financial tool enables participants to make money even in a flat freight market.

THE Baltic Exchange claims its dry freight derivatives screen, Baltex, it is close to reaching the critical mass needed for success, but rumours in the market suggest that although members have signed up many are simply taking a look at the system and not actually trading on it, writes LizMcCarthy.

HOW to eliminate price volatility fromthe container shipping freight trades remains one of the biggest challenges faced by the industry. Far from becoming less extreme, freight rate peaks and troughs are becoming more pronounced, leaving container lines, forwarders and shippers to contend with unprecedented swings between profit and loss. This case study examines how hedging risk with container freight derivatives works from forwarder perspective.

SCRAP steel swaps are the latest tool at the maritime industry’s disposal to hedge against volatile financial and commodities markets. Launched by London-headquartered Freight Investor Services in December, with a primary focus on steel mill clients attempting to mitigate against swings in the global price of scrap steel, interest from members of the shipping community is on the rise.

Container freight derivatives have all the appearance of a premature new-born. But the proud parents already have big plans for the newest addition to the freight swap family. Indeed, this is a baby with a growing cluster of relatives and well-wishers, all keen to take a role in its development. First though, this nascent market must show growth, not just potential, and convince its elders that it too, can be a contender.

Trading in steel derivatives has soared in 2010 and is likely to keep on increasing, despite opposition from the big steelmakers as the futures market eats into their control over pricing.

Despite their resistance to derivative markets, some container lines are starting to show interest.

With prices now as high as $500 per ldt, owners could be attracted by the prospect of locking in forward sales for their vessels.

Deepsea shipping lines have again delayed rate increases on the Asia-Europe trade: this time until March, after spot rates unexpectedly slipped.

The nascent trade in container freight derivatives received a boost this month with news that niche transpacific carrier The Containership Company (TCC) was discussing index-linked rate agreements with its customers in advance of the 2011/12 contracting season.

Freight Investor Services (FIS) reported on Friday its first China rebar steel swap trade between Ronly Trading and Morgan Stanley at $690 per tonne for the first quarter 2011.

TRADES in iron ore swaps reached near-record levels in October as larger numbers of Chinese counterparties enter the market, boosting liquidity.

THE refusal of major shipping lines to embrace trading in container freight derivatives threatens the future development of the financial product, even though criticisms “miss a key point”, a weekly report from Alphaliner has concluded.

DOES it take a container shipping newcomer to find a solution to the problem of freight rate volatility that has been baffling the experts for years?

A FRESH approach to contract talks between container lines and their customers could take much of the tension out of the process, writes Janet Porter.

Hedging against market volatility is nothing new, but trading in container freight derivatives is being greeted with a mixture of scepticism and puzzlement among industry players. Martin Dixon provides a layman’s guide and analyses the implications and likely support from stakeholders.

Container lines, recession-battered but largely intact, are poised to join the derivatives club in a win/win for lines and shippers

TWO leading freight futures brokers have vigorously defended container freight derivatives against recent criticisms from several leading liner operators.

FORGET civil rights, sexual liberation and pop music. The swinging sixties also saw the advent of containerisation in shipping.

Breakthrough development seen as key to growing liquidity for the market for container freight swap agreements.

Peter Norfolk, Head of Research for Freight Investor Services is interviewed on Reuters Insider TV about the Cape FFA contango and prospects for the physical and paper freight market in the remainder of 2010. Click here to view the clip.

Iron ore swap contracts have become increasingly popular since late 2008, as a bid by miners to create a more market-based pricing scheme has gained momentum after they abandoned the decades-old annual benchmark system.

Asian iron ore prices rise 8% after a week of increased buying from Chinese steelmakers.

STABILISING bulk carrier rates saw the value of dry paper contracts for the third and fourth quarter of 2010 return to levels last seen at the start of July.

The iron ore swap market is expected to grow leaps and bounds in volumes after the pricing of the commodity shifted from the traditional benchmark system to market-related prices, industry sources said on Monday.

A SURVEY of freight derivatives users has shown positive and growing interest in the new market for container freight swap agreements.

Kerry Logistics involvement in the first cleared container freight swap is probably no coincidence.

Singapore has long been a hotbed of support for Manchester United but this summer it will be the clarets rather than the reds topping the bill in the island republic.

The City of London is hoping to grab a dominant position in the emerging $700 billion iron ore derivatives market.

Iron ore spot prices are up 6% this week as rumblings from China about restricting iron ore imports from major producers in Australia and Brazil have sparked a buying frenzy, traders and brokers said Friday.

LONDON, April 9 (Reuters) - A switch by major miners to quarterly pricing of iron ore contracts is likely to lift rates in the short-term for larger capesize ships with volatile freight activity expected, brokers and analysts said on Friday.

Banks and brokers are gearing up to exploit the new iron ore pricing system by developing a multibillion-dollar derivatives market similar to the ones that exist for commodities such as oil, aluminium and coal.

MONTHLY trading volumes in the iron ore swaps market could double this year to hit a new high of 2.5m-3m tonnes as the evolving derivatives trade expands and attracts more participants.

Freight rate volatility forecast to increase as miners end benchmark

Iron ore swaps used to hedge against price volatility have seen a “surge” of interest with the shift away from annual price benchmarking.

Just the right amount of info to the right people separates FIS from its ‘wood-panelled’ competitors.

AN ESTIMATED one third of traders in the nascent iron ore swaps market are also trading in dry freight derivatives as part of their risk management strategies.

Despite last week's surge in bulker rates, the cost of hauling ore has been left on the "backburner", while the cash price of ore delivered to the world's largest consumer has recently been at its highest for more than a year.

Derivatives house FIS says this year's annual iron ore benchmark price talks could again founder against the backdrop of mining players seeking shorter or index-linked contracts and more spot trading.

Quarterly-settled and index-linked iron ore supply contracts will improve liquidity in the iron ore spot market and associated futures market, said over-the-counter iron ore swaps broker Freight Investor Solutions.

India-to-China supramax rate allows hedging against volatility for iron ore swaps and derivatives.

A freight brokers industry group held a telephone conference at the end of last week to discuss the London Metal Exchange's proposal for a joint venture, reiterating its stance that everything that needs to be said has been said, sources told FastMarkets.

Independent broker Freight Investor Services (FIS) has called on the shipping industry to reject the advances of the London Metal Exchange once and for all, setting out a detailed rebuttal of what it sees as the LME's "grab, control and auction" plan for the market.

The London Metal Exchange launched a fresh effort to agree an alliance with the Baltic Exchange with a formal proposal to unite the two financial institutions and transform global freight trading.

Dry bulk freight volumes so far this year signal a return the brighter days of 2008 even as the market battles with a new post-credit crunch landscape and the deployment of new vessels that could set back its fragile recovery.

Options trading is set to take off as traders look to hedge against derivatives losses

A controversial export ban on iron ore would result in a capesize boom.

FIS forecasts 2m lots will be sold in 2010 as market stages recovery.

Opposition from ship brokers and a lack of experience in the seaborne sector is set to scupper any bid by the London Metal Exchange (LME) to move into the freight derivatives market.

THE introduction of another cleared iron ore swap contract could fragment a market that is still in early stages of development, John Banaszkiewicz, chairman of the Iron Ore and Steel Derivatives Association (IOSDA) has said.

Change is coming to the freight derivatives market and the Baltic Exchange needs to respond to it, the Lord Mayor of the City of London said on Wednesday.

Without doubt, 2009 was a bad year for the longstanding benchmark system for setting the annual prices of iron ore and coking coal, the main ingredients in steel.

Brokers are up in arms over what they see as a move by the London Metal Exchange to invade their territory.

The Baltic Exchange has been mandated by traders to look again at a central electronic central platform. FIS John Banaszkiewicz remains unconvinced by the LMEs case, saying The LMEs canoe wont float.

Increased trading in iron ore swaps can be used to help boost liquidity in the dry bulk freight derivatives market, a major dry bulk freight derivatives brokers said yesterday.

Derivatives broker Freight Investor Services has teamed up with London Clearing House LCH.Clearnet in a bid to bolster the trading of fertilizer swaps.

FREIGHT Investor Services has slammed the latest study from the London Metal Exchange calling for a shift from over-the-counter to exchange trading.

THE Baltic Exchange has warned that increased regulation by the European Commission of over-the-counter trading in the freight derivatives market could drive business away from Europe to other global financial centres.

A proposal has been made to bring forward publication of the daily Baltic Exchange freight indices to increase deivatives trading in Asia.

The London Metal Exchange overtures towards members of the Baltic Exchange regarding FFAs have been met with varied responses.

The over-the-counter (OTC) market in iron ore swaps offers physical market participants a huge advantage, iron ore and freight derivatives broker Freight Investor Services told Metal Bulletin.

Record volumes of seaborne iron ore sold in spot market

Chinese companies have started trading iron ore in the nascent derivatives market in a further sign that Beijing could be laying the ground to move away from the benchmark system of annual iron ore prices.

FFA broking house FIS has reacted to the slump in paper volumes by branching out on the physical side. It has set up a new company, Freight Investor Solutions, and recruited Hai Yao, for several years with Maersk Broker, as well as Simpson, Spence & Young (SSY) supramax broker Andrew Dawson, who starts in June.

Reuters - Volumes in the nascent iron ore swaps market are expected to reach up to 15 million tonnes this year as price volatility prompts steelmakers and miners to seek alternative pricing mechanisms, FIS said on Friday.

The development of the iron ore spot market was boosted yesterday after LCH.Clearnet, Europe's largest independent clearing house, said that it would it would start clearing ore contracts. The launch of clearing systems for spot ore puts "more pressure on the benchmark system," said Michael Gaylard, strategic director at Freight Investors Services, a London-based iron ore broker. "This is a turning point for the iron ore market."

FIS (Freight Investor Services) in cooperation with the London Clearing House (LCH.Clearnet) is pleased to announce the launch of a cleared CIF China cash settled iron ore derivative. 850 Million Tonnes of Iron Ore with a market value of $160 billion were shipped in 2008 and the emergence of a cleared OTC swap contract will be essential for price risk management. Up until now 85% of iron ore sold has been on via an annual benchmark price negotiation, currently this process of deciding price is in danger of being blown wide open, leaving the spot market to be the key price driver.