Intercontinental Exchange (ICE) has launched a new freight futures contract based on the Baltic Exchange’s liquid petroleum gas (LPG) assessment for the Houston to Chiba route (BLGP3). The contract is also listed by CME, providing world-class clearing options.
The LPG market is a niche, but important shipping market. The Baltic Exchange has been supporting the market with daily assessments since 2002, reporting on Middle East to Japan rates. But the rapid growth of the Houston petro-chemical complex, supported by a global customer base and the emergence of ever more Very Large Gas Carriers, has allowed the Baltic Exchange to report on two new routes from the US Gulf to Europe and Asia.
The USA is one of the world’s top producers and leading exporters of LPG and Asia is one of the largest demand centres for the fuel. Freight rates from Houston to Chiba have fluctuated between $45.75 and $182.40 per ton since the Baltic Exchange began reporting on the route in April 2020.
“Hedging the U.S. Gulf Coast to Japan export route has become ever more critical for our customers,” said J.C. Kneale, Vice President, North American Gas and Power, at ICE. “ICE’s natural gas liquid markets are growing strongly, with open interest out to 2024. With the new LPG freight contract, we are helping our customers to further manage their entire portfolio of exposure for LPGs from production to shipping to consumption.”
The new BLPG3 contract will trade alongside ICE’s existing LPG freight future based on the Baltic Exchange’s assessment for the Middle East to Japan route (ICE: WAT).
Source: Baltic Exchange