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Freight Derivatives * UK - China factor helps drive
Bankers and hedge fund managers are increasingly turning to the nascent world of freight derivatives. The market is on course to hit a record $150bn in value – a 200 per cent increase on last yearLondon,UK -Financial Times, by David Oakley -October 14 2007: -- ... With volumes in many other derivatives markets, such as credit default swaps, hit by the liquidity crunch, freight derivatives have, by contrast, experienced a big surge in business as a result of the booming Chinese manufacturing sector, which requires raw materials... Freight derivatives are forward contracts that were once used almost entirely by ship owners and manufacturing companies to lock in a fee for renting a ship, but now banks and hedge funds are making speculative bets on the market’s direction... John Banaszkiewicz, managing director of Freight Investor Services, the freight derivatives broker, said: “We have seen a whole new influx of players in the past year. The banks have been setting up proprietary desks and new funds have set up to speculate and make money in this market.” Citigroup, Merrill Lynch and Macquarie Bank have set up proprietary trading desks in the past few months... Big sums can be made as the forward market is extremely volatile because it is difficult to determine weather conditions... (Photo from www.singlesourcetransportation.com: General commodities truck load)
Labels: freight analysis
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