UK Exchange Adds LNG Shipping Indices

UK Baltic Exchange has launched indices for LNG tanker day-rates, based on the carriers burning LNG, rather than marine fuel oil or marine gas oil as their primary fuel, it said March 3. They cover return trips for: Australia to Japan; US Gulf to Europe; and US Gulf to Japan.

The need for more price discovery on the freight side is growing: a shortness of shipping capacity this winter contributed to the highest prices ever paid for LNG spot cargoes delivered to Asia.

Published twice weekly, the new indices will be published alongside the current LNG indices which are based on LNG carriers burning very low sulphur fuel oil. Historical data for the new indices will be available dating back to 1 January 2020 – when tighter regulations governing sulphur content in bunker fuel took effect – and cover several LNG consumption rates depending on the vessel's speed and activity.  

CME Group plans to launch three new futures contracts based on the new Baltic Exchange indices on 22 March, 2021, pending regulatory review.

It said: "As LNG markets continue to evolve globally, demand for new tools to manage the risk around its transportation is also growing rapidly. The introduction of contracts based on the use of LNG as bunker fuel among global shipping routes is the next step in the evolution of freight and provides another market-based solution to help our customers to manage their global gas risk."