A newly launched Baltic Exchange LPG rate assessment has been used for a freight derivatives contract.
The Baltic, which is controlled by the Singapore Exchange, said the BLPG was traded by Gunvor and Vilma and cleared by CME Group on 28 April.
The trade was brokered by Clarksons Platou Futures.
The Baltic launched its daily rate assessment BLPG3, which covers the route from Houston to Chiba via Panama, in February. It provides a US-dollar-per-tonne rate for cargoes of 44,000 tonnes moving from the US Gulf to Japan.
It is one of three daily Baltic LPG assessments.
On trial
The BLPG1, from Ras Tanura to Chiba, went live in March 2003 and is listed daily by the Intercontinental Exchange (ICE) and CME Clearport. There’s been forward freight agreement (FFA) trading on LPG1 since April 2015.
The BLPG2 from Houston to Flushing was launched in 2020 but remains on trial.
Clarksons Platou Futures LNG and LPG derivatives broker Christian Greenop 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.
Greenop said the liquidity around the dynamic “take or pay” free-on-board contracts out of the US Gulf have become a key driver in today's global LPG trade.
Baltic 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.”
CME Group global head of energy Peter Keavey said his company was pleased to see support from customers for the new LPG futures reflecting the cost of shipping from the US Gulf to Asia.
Keavey said: “The surge in exports from the US 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.”
