Baltic Exchange Plans New LNG, Container Indices

On Wednesday, the Baltic Exchange – a bedrock institution of the maritime world and the keeper of several benchmark shipping indices – announced plans to revamp its offerings, which may soon include a container market index and a freight LNG index. The changes follow the 270-year-old firm's acquisition by the Singapore Exchange (SGX), which was completed in November.

The Baltic Exchange was founded in 1744 and initially served as a forum for chartering ships. It now offers a trading platform for freight derivatives and a set of closely-watched freight indices, notably the Baltic Dry Index (BDI).

In a measure of the London-based company's new orientation towards the east, CEO Mark Jackson announced the additions to its lineup at a conference in Singapore. “The recent acquisition of the Baltic Exchange by the Singapore Exchange (SGX) has reinvigorated this key international maritime institution, allowing us to grow our leadership profile," Jackson said in a statement. "These are bold plans and will ensure that the Baltic Exchange remains at the heart of the bulk shipping industry for the long-term. In 2017 we will be providing more freight market benchmarks and move into the LNG and container spaces."

The exchange says that it is already working with SGX on an LNG freight index to support spot pricing. LNG shipping is a sector with growth potential for SGX, which already offers an Asian LNG spot index called "Sling," including separate indices for Singapore and North Asia. Last year, it introduced a range of gas futures and swaps contracts linked to its LNG indices (and delinked from the price of crude), and it is working on a new index covering Dubai-Kuwait-India (DKI). Taken together, these moves reflect Singapore's broader desire to become a physical and financial hub for LNG trading, which is expected to grow dramatically in Southeast Asia over the next ten years.