From late November the European Energy Exchange (EEX) is adding new freight futures and options contracts for both LNG and dry freight markets next month.
Leipzig-based EEX said the products it is adding are the new Baltic Supramax 11TC Freight Month Future along with the Baltic Supramax and Capesize Month Options for various routes.
The Exchange is also extending its reach into LNG freight by including the Baltic LNG 174 Freight Month Futures for three intercontinental routes.
EEX highlighted that it already offers the JKM LNG Natural Gas Futures and the recently launched TTF Futures which is denominated in US Dollars. These were launched in April 2024.
All contracts will be cleared in Europe via the European Commodity Clearing (ECC).
Chief operating officer Steffen Koehler said: “The EEX freight futures markets have seen significant growth in importance as well as volumes over the past years, and we believe that an extended offering for these sectors will be essential to meet the growing market demand.”
EEX senior business developer Peter Blogg told TradeWinds that through 2022 and 2023 the Exchange started looking at LNG again.
He said with the way things were changing in the sector and because Europe was becoming so reliant on LNG, EEX would look to re-enter the market again.
Blogg, who said he had been living and breathing LNG for the last two years, explained that when EEX launched the two LNG futures products in April it said this would be part of a product build-out on LNG.
Based on customer demand, EEX then wanted to add in the LNG freight as this is a “pretty volatile component in the LNG mix.” He said the general preference in the market seemed to be contracts based on the Baltic indices, particularly the new 174 indices, with a European clearing solution.
Blogg points out that the LNG fleet is due to expand by around 50% in the next three to four years and with new production coming onstream and growing consumption in Europe and Asia, both trade and energy companies’ customers are saying it is becoming more critical to hedge this risk in the market.
“People see this area of growth and of interest and growing liquidity,” he added. “We will react according to the way the market evolves.”
