Traded volumes of dry freight derivatives showed a significant increase in 2021 and options volumes were at an all-time high.

Rampant dealing came amid significant price volatility in the chartering market and for commodities.

Dry forward freight agreement volumes reached 2,524,271 lots last year, up by 61% when compared with 2020.

Options trading hit its highest ever level of 409,255 lots in 2021, up 25% on the previous year.

It is not clear what proportion of these volumes are tied to physical contracts.

Mark Jackson, chief executive of the Baltic Exchange, said the volumes were the result of another volatile year.

"Last year the dry bulk market experienced considerable swings as a result of ongoing supply-chain challenges caused by the Covid-19 pandemic," he said.

"With low freight rates, the tanker FFA market was more subdued in 2021 due to a lack of sellers. But there are signs of confidence in the market. Our benchmark Middle East Gulf to China crude oil route [TD3C] has open interest going out five years, which shows the excellent depth of this market."

Tanker FFA volumes were down by 16% on the previous year, reaching 553,535 lots.

The Middle East Gulf to China (TD3C) contract was the most heavily traded, with 304,719 lots changing hands.

Bulk breakdown

Panamax freight derivatives were the standout winners in 2021 on the dry-cargo side.

The most heavily traded contract was settled against the Baltic Exchange's panamax time-charter assessment, which saw 1,202,432 lots traded in 2021. This is up from 744,237 lots in 2020.

Capesize volumes grew year on year by 46% and hit 867,488 lots in 2021.

Last year also saw the effective relaunch of handysize FFAs, when clearing houses SGX and EEX both began to clear the trades from April last year. Nothing was traded last year.

Baltic data shows 16,095 lots of handysize FFAs were traded in 2021, the highest in years.

But handysize paper has had to fight to establish its own niche alongside supramax FFAs, which have long been the hedging instrument of choice for smaller bulkers.

Baltic data shows that the traded volumes for supramax FFAs still vastly outnumber that for handys.

A total of 436,266 lots of supramax paper was traded in 2021, almost double the 225,897 lots during the previous year.

One lot is defined as a day's hire of a vessel or 1,000 tonnes of ocean transportation of cargo.