New Baltic training courses: IMO 2020 bunker hedging and FFAs for LNG

  • Nov 08, 2019
  • Investing

The Baltic Exchange is launching two new half-day training courses in Singapore this February as part of its Baltic Academy programme. Bunker Hedging Post IMO 2020 (4 Feb) and Managing LNG Freight Risk (5 Feb) will be led by risk management specialist Mikal Boe.

Bunker Hedging Post IMO 2020 is for bunker buyers, traders and suppliers wishing to understand how IMO 2020 may affect the hedging of bunker fuel prices as the ‘old’ contracts disappear and ‘new’ ones emerge. Attendees will learn best practices in bunker fuel price risk management, using new low sulphur fuel oil contracts and gasoil contracts as well as basis risk between ports and how to manage regional discrepancies.

Bunker risk management essentials

– The economics of a bunker hedge in a COA and for bunkers on redelivery

– Classic signs of when to hedge and when to float on the spot market

– Tried and tested hedging strategies – practical examples

– How IMO 2020 changes bunker hedging,and why

Hedging bunker price exposure with new contracts

– Term structure and oil market dynamics

– The new low sulphur fuel oil contracts, market mechanics post 2020

– Low sulphur marine gasoil contracts

– Basis risk and regional price differentials, best practice hedging

– New hedging strategies – practical examples

– Execution, clearing, collateral and cash management

Managing LNG Freight Risk Using Futures teaches participants how to trade and use FFAs effectively to manage pricing risk from volatility in LNG freight rates. This half day course is designed to help build confidence in using new indices from the Baltic Exchange in managing risk for shipping and is suitable for both LNG and shipping company executives.

The Baltic BLNG Index

– Comprehensive understanding of the BLNG Baltic Index and Index methodology

– The role of panels and integrity of the market

– Pricing of the Index on time charter and voyage charter

– Calculating ‘Basis Risk’ between the LNG Index and main LNG trading routes

– Index Settlement mechanisms and correlations

– Term structure of the LNG forward curve

– Contango, backwardation, inversions and seasonality

Putting it all together with FFAs

– Composition, construction and use of an LNG FFA derivatives contract

– Practical application of LNG FFAs to freight contracts and time charters

– Calculating pricing risk, calendar risk and cash flow

– Settlement mechanisms

– Leverage and Margining and mark-to-market

– Stress testing

– Examples and practical uses of an LNG FFA contract