2021, a record year for the volumes of dry freight derivatives

The freight derivatives market for dry cargo has seen an increase in traded volumes in 2021, according to data released by the Baltic Exchange.

Dry Forward Freight Agreements (FFA) volumes reached 2,524,271 lots, up 61% from 2020. Dry market options trading hit an all-time high of 409,255, up 25% compared to the previous year. The most traded contract was settled against the Baltic Exchange’s panamax timecharter (PTC) valuation, which saw 1,202,432 lots traded in 2021.

FFA tanker volumes are down 16% from the previous year, reaching 553,535 lots. Middle East Gulf to China (TD3C) was the preferred oil contract with 304,719 lots having changed hands.

A lot corresponds to a day’s rental of a vessel or to 1,000 metric tonnes of freight transport by sea.

Commenting on the numbers, Baltic Exchange Managing Director Mark Jackson said:

“2021 has been another impressive year for the Dry FFA market. These volumes are underpinned by volatility, world-class clearing, confidence in Baltic Exchange settlement data, and increased participation from owners, charterers and traders. Our status as a regulated benchmark provider has allowed more hedge funds and banks to enter this mature and liquid market.

He added:

“Over the past year, the dry bulk market has seen significant fluctuations due to the lingering supply chain challenges caused by the Covid-19 pandemic.

With low freight rates, the FFA tanker market was sluggish in 2021 due to a lack of sellers. But there are signs of confidence in the market. Our Middle East Gulf to China Crude Oil Benchmark (TD3C) route has open interest over five years, demonstrating the excellent depth of this market. “
Source: The Baltic Stock Exchange

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