Bunker swap contracts
Swaps are available on nearly all types of fuel including bunker fuel, diesel fuel, gasoil, gasoline, heating oil, jet fuel, fuel oil, etc. Swaps received their name as the buyers and sellers of swaps are “swapping” cash flows with one another - floating for fixed and vice versa. In finance, a swap is a derivative contract in which one party exchanges or swaps the values or cash flows of one asset for another. Of the two cash flows, one value is fixed and one is variable and based on an index price, interest rate or currency exchange rate. Swaps are derivative instruments that represent an agreement between two parties to exchange a series of cash flows over a specific period of time. Swaps offer great flexibility in designing and structuring contracts based on mutual agreement. This flexibility generates many swap variations, A Bunker Swap is a contract which allows ship-owners and charterers to fix the cost of their bunkers. The most common bunker swap is the fixed rate bunker swap. Examples 2 and 3 below will allow us to better understand how bunker swaps work.
The hedging strategy most commonly used to hedge bunker fuel is known as a fixed price swap. The price of these swaps is based on the forward market prices for the most "liquid" (actively traded) bunker fuel price indices such as Platts Gulf Coast 3% fuel oil, Platts Rotterdam 3.5% fuel oil or Platts Singapore High Sulfur fuel oil 380 CST.
Supplier Competition with Option Contracts for Discrete Blocks of Capacity. Article Short-term liner shipping bunker procurement with swap contracts. Article. Atlas Missile Silo turned into Luxury Survival Condos. Survival Bunker Security / Full Luxury Resort Living. We are now taking contracts on our second Survival 22 Nov 2018 The new futures contracts mean bunker traders will be able to hedge a 0.5% Platts reported that liquidity on the 0.5% swap contracts is as yet Credit risks; Freight rate risks; Bunker price risks; Interest rate risks; Currency risks When entering into financial contracts, including bunker swaps, FFAs and Types of shipping contracts Forwards, futures, options & swaps- Exchange- Traded vs Over-the-Counter- Forward bunker contracts: hedging and trading
‐Electrolux just extended index linked contract ‐Several index linked contracts filed with the FMC ‐Panalpina, Logfret , SEKO Logistcs, Cargill, SDV Geis, commited ‐2 Clearing houses eliminate counterparty risk ICAP comission: 5‐15 USD per Container (TEU or FEU) / month => Cash flow / NOT Cargo
The BW180 Index is a daily average dollar value index of 180 centistoke (cst) bunker fuel from the same 20 key bunkering ports used to calculate the BWI (Bunkerworld Index). To obtain a representative geographical spread, the ports were selected by size with reference to their geographical importance. Liquidity on the 0.5% swap contracts is as yet unknown, but traders point towards increased activity through 2019 as more clarity has been provided, with physical demand for 0.5% marine bunker fuel picking up towards Q4 2019. Open interest for ICE March Singapore HSFO swap contracts rises 18% on month in Feb Total open interest for the March Singapore high sulfur fuel oil swap contracts traded on the Intercontinental Exchange rose 18% month on month to 6.13 million mt as of February 28, data from the exchange showed this week. For further details about Fuel Oil Swaps or to discuss trading opportunities, call: Bunker fuel makes the global shipping industry move and powers seaborne trade - the global physical market is currently estimated at 400-500m tonnes per annum, with a paper market about seven times that size. Swaps are derivative instruments that represent an agreement between two parties to exchange a series of cash flows over a specific period of time. Swaps offer great flexibility in designing and structuring contracts based on mutual agreement. This flexibility generates many swap variations, ‐Electrolux just extended index linked contract ‐Several index linked contracts filed with the FMC ‐Panalpina, Logfret , SEKO Logistcs, Cargill, SDV Geis, commited ‐2 Clearing houses eliminate counterparty risk ICAP comission: 5‐15 USD per Container (TEU or FEU) / month => Cash flow / NOT Cargo
This article explains how companies in the maritime industry can hedge their bunker fuel price risk with a hedging strategy known as a fixed price swap.
28 Sep 2010 “swap,” “swap dealer,” and “eligible contract participant.” surcharge known as a “bunker charge;” therefore, while the firm does not purchase Fixed for Floating Swaps: Key contract components - Differences between futures and swaps - Case study: Hedging Bunker fuel purchases with swaps swap contracts that are negotiated off- exchange with counterparties such as natural gas futures for delivery at the Henry Hub in Louisiana, bunker fuel (No. 1 Aug 2013 Bunker Fuel and iron Ore products in Asia Pacific. Which Contract do you consider. 2. Options – the benefits comparison to an FFA SWAP. Bunker swap is an OTC agreement between two bunker supplier or bunker purchasers to exchange their cash flows arising from the fluctuation of future bunker prices by locking in an agreed fixed bunker price.
3 Dec 2019 Using fuel oil swaps can help owners to easily and cost effectively fix the price of future bunker oil purchases. They can also be used by a wider
1 Aug 2013 Bunker Fuel and iron Ore products in Asia Pacific. Which Contract do you consider. 2. Options – the benefits comparison to an FFA SWAP. Bunker swap is an OTC agreement between two bunker supplier or bunker purchasers to exchange their cash flows arising from the fluctuation of future bunker prices by locking in an agreed fixed bunker price. #1: Swaps. A swap is a financial instrument that allows the buyer to hedge his bunker exposure by fixing the price he pays for fuel at a predefined level, over a predefined time period. Execution: Select the most relevant contract (e.g. US Gulf Coast No.6 Fuel Oil 3%) Select volume of fuel to hedge. Select time period. Cleartrade says its market offers a better way to trade bunker contracts. Cleartrade Exchange (CLTX) says it is listing three fuel oil single swap contracts, allowing traders to swap as little as one metric tonne of fuel oil on the exchange's commodity and freight derivatives platform.
Fixed for Floating Swaps: Key contract components - Differences between futures and swaps - Case study: Hedging Bunker fuel purchases with swaps swap contracts that are negotiated off- exchange with counterparties such as natural gas futures for delivery at the Henry Hub in Louisiana, bunker fuel (No. 1 Aug 2013 Bunker Fuel and iron Ore products in Asia Pacific. Which Contract do you consider. 2. Options – the benefits comparison to an FFA SWAP. Bunker swap is an OTC agreement between two bunker supplier or bunker purchasers to exchange their cash flows arising from the fluctuation of future bunker prices by locking in an agreed fixed bunker price. #1: Swaps. A swap is a financial instrument that allows the buyer to hedge his bunker exposure by fixing the price he pays for fuel at a predefined level, over a predefined time period. Execution: Select the most relevant contract (e.g. US Gulf Coast No.6 Fuel Oil 3%) Select volume of fuel to hedge. Select time period. Cleartrade says its market offers a better way to trade bunker contracts. Cleartrade Exchange (CLTX) says it is listing three fuel oil single swap contracts, allowing traders to swap as little as one metric tonne of fuel oil on the exchange's commodity and freight derivatives platform. Buying on Contract This is an option favoured by bunker buyers who don’t want to risk the daily fluctuations of the spot market and purchase enough volume to negotiate themselves a good premium