FIS makes bunker swaps simple

News Release Freight Investor Services (UK) March 9, 2012

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New
commodity swap from leading brokerage will make trading easier with smaller lot
sizes, providing users with a simple way to manage fuel price
risk.
London, March 05, 2012. Freight
Investor Services has expanded its rapidly growing commodity broking business
into cleared, over-the-counter bunker swaps. The new service – the Fuel Oil
Single Swap (FOSS) - comes in response to escalating bunker prices which are
hurting shipowner margins at a time of historically low freight
rates.
The new FIS offering will include
three fuel oil contracts: Singapore 380 centistokes (CST), Singapore 180 CST and
Rotterdam 3.5% sulphur barges FOB. In contrast to existing swaps, these
contracts will be traded in lot sizes of just one tonne, enabling easier access
to these markets for smaller players such as shipowners who need to manage their
fuel cost risk for small fleets or even individual vessels. 
This new pool of liquidity should
attract players from across the bunker sector including suppliers and traders as
well as funds and banks.
The price of Singapore 380 CST
bunkers stands $40/t higher than at the start of 2012. A typical Capesize vessel
on a 45-day voyage can consume 2,500 tonnes of fuel, costing over $100,000 more
today than just two months ago. By hedging that price risk shipowners and
operators can protect themselves more effectively than leaving themselves at the
mercy of the spot market. 
FIS managing director John
Banaszkiewicz said: 
“With some of the lowest freight
rates of the past 20 years across all the shipping sectors - including dry bulk,
tanker and container markets – and some of the highest bunker prices on record,
fuel oil can account for as much as 70% of vessel running costs. This needs to
be traded and managed. FIS is delighted to offer this innovative broking service
where size does not matter. Any counterparty, whatever their size, can trade as
many or as few bunker swaps as they want.”
“Added to this, the three bunker
swaps will be available in real-time, with live prices posted on FIS’ free
multi-commodity trading screen, making them even simpler and easier to
trade.”

The new FIS bunker
swaps desk is based in London and staffed by Damien King and Ali Ersen, who both
have over 10 years’ broking experience. FIS plans to expand coverage across
FIS’s global office network as volumes grow.
The swaps will be listed for clearing
by SGX and NOS and consist of a single tonne, cash-settled swap contract based
on the Platts daily assessment price of the main index, tradable up to four
years forward.
Bunker swaps are a perfect complement
to the existing FIS portfolio of freight, steel, scrap, iron ore, container and
fertilizer derivatives as well as its physical commodity and shipbroking
services. FIS expects to be able to deliver considerable synergies to its
clients trading in these parallel markets.
For further information on trading
the FIS Fuel Oil Single Swap or to access the FIS screen please call +44 (0) 207 090 1134 or email <A
href="redir.aspx?C=4ec79c5d83314d84a56f1611eff544c3&URL=mailto%3abunker%40freightinvestor.com">bunker@freightinvestor.com</A>.</DIV></BODY></HTML>