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Tanker FFA market
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The tanker FFA market is traded over a huge range of sizes and distances provided
by the Baltic Exchange - for example TD3 is 260,000MT AG/Japan (VLCC - very large
crude carrier), or TD7 80,000 cross N/Sea (Aframax).
The market is divided: Clean is gasoline and naphtha, for example; and Dirty, crude
oil and fuel oil. Both types trade regularly.
While freight makes up a lesser proportion of the total value of the cargoes carried
by oil tankers than in the dry market, that proportion has grown in recent years
and freight volatility has increased hugely. As a result, the growth in the FFA
market has been spectacular.
Only since 1994 have FFAs allowed both natural buyers (charterers) and natural sellers
(owners) the ability to hedge their exposure to this volatility. Tanker rates, in
terms of $/per day, have in the past fluctuated within 12 months from $50,000 to
$270,000 on the VLCC Ag/Japan route. TD3 is probably the most liquid and heavily
traded route, although the clean routes, particularly TC2 and more so TC5 have seen
an increase in trade volumes since the beginning of 2009.
Click here
for the Tanker Contacts.
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