The first freight derivatives contract using the Baltic Exchange’s recently launched liquified petroleum gas (LPG) assessment (BLPG3) was traded by Gunvor and Vilma and cleared by CME Group last week (28 April). Clarksons Platou Futures brokered the trade.

Providing a USD per metric ton rate for cargoes of 44,000 metric tons moving from the US Gulf to Japan, BLGP3 is a daily assessment published by the Baltic Exchange and its panel of independent shipbrokers.

Christian Greenup, LNG & LPG derivatives broker at Clarksons Platou Futures said:

“The BLPG3 route is a welcomed addition to the LPG derivatives market, enabling market participants to take a position in the growing Houston – Asia trade, where the liquidity around the dynamic “take or pay” FOB contracts out of the US Gulf have become a key driver in the global LPG trade of today.”

Baltic Exchange Chief Executive Mark Jackson said:

“We’re backing the development of this new market and hope to see it mirror the success of FFAs in the dry bulk and tanker sectors. We have invested significant resources in achieving regulated status and will continue to ensure that our information is audited, verifiable and completely independent.”

Peter Keavey, Global Head of Energy at CME Group said:

“We are pleased to see customer support for the new LPG freight futures, which reflect the cost of shipping from the US Gulf Coast to Asia. The surge in exports from the U.S. to Asia has boosted demand for new price risk management tools around its transportation and these new Baltic contracts will help customers better manage their risk in today’s rapidly evolving global gas market.”

The Baltic Exchange provides three daily assessments for LPG market covering Middle East Gulf to Japan, US Gulf to Europe and US Gulf to Japan.