India seen as a major Baltex trader

SINGAPORE: As a leading global trader, India should be a major player on the Baltic Exchange's central trading platform to be launched in May covering forward freight agreements (FFA), a hedging tool for shippers, shipping companies and trade financiers, a senior official in the exchange has said.

"We see Indian global traders having a significantly higher role in the FFA trade," said Philip Williams, manager for Asia Pacific in the exchange's Singapore representative office.

India-based companies were already using the Exchange's daily freight indices and assessments on coal and iron ore trade movements between India, Indonesia, Australia and China, Williams told PTI.

The exchange produces around 50 specific route-based reports daily providing freight rate assessments that are widely used by traders as benchmarks in booking ships and cargo space on both the dry cargo and tanker markets.

It began producing such information as long ago as 1985. "Going by Indian demand for our FFA information, we are confident of seeing more and more Indian companies hedging exposure to freight market risk through the trading of specific time charter and voyage rates for forward positions," stressed Williams, who set up the exchange's Singapore office in 2007 to cover Asia Pacific markets.

Though current regulations do not allow India-based companies to participate in such futures and derivative trades, a growing number of Indian companies have set up offices in Singapore to take advantage of risk hedging opportunities, Williams said.

"It is important for the Indians to participate in all marketing tools including the proposed internet-based Baltic's FFA platform 'Baltex' and stay in the forefront of global trade," he said.

The exchange started compiling India-specific freight rate reports last July, he said.

One of the most popular assessments is on iron ore exports from Vishakhapatnam on the Indian east coast to Qingdao in southern China.

It started the India-China iron ore route time charter report in March 2010.

Though freight rates on the Vishakhapatnam and Qingdao route have been steady, ranging between a low of USD 13.20 per tonne in November and USD 17 per tonne in March, the Indian business community interest in such assessments show their strategies to work out long-term freight rate plans, he said.