ICE Announces Rapid Growth in Marine Fuel and Wet Freight Complex a Year on From IMO 2020
February 25 2021 - 8:38AM
Business Wire
Marine Fuel OI up 75% y/y as customers adopt
it for hedging
Wet Freight hits record OI of more than
106,000 lots
2.3 billion barrels of marine fuel and 600
million tonnes of wet freight traded on ICE in 2020
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator
of global exchanges and clearing houses and provider of mortgage
technology, data and listings services, announced record growth
across its Marine Fuel and Wet Freight complex, a year on from the
implementation of the sulphur cap by the International Maritime
Organization (IMO) in January 2020.
The IMO regulation requires ships to use fuel oil with a maximum
sulphur content of 0.5% versus the previous limit of 3.5%. Since
February 2019, ICE has launched a series of cash settled Marine
Fuel products which settle against the S&P Global Platts’
physical Marine Fuel 0.5% assessments, including a further 15
contracts which launched in December 2020. Today, the complex is
comprised of approximately 50 different Marine Fuel contracts,
offering customers the widest selection of tools available to hedge
their marine fuel exposure, all of which trade and clear alongside
the global benchmark for refined products, ICE Low Sulphur
Gasoil.
In an increasingly volatile pricing environment globally,
companies are choosing to hedge their underlying exposure to marine
and freight markets. Since February 2019, Open Interest across
Marine Fuel has grown to a record of more than 270 million barrels
equivalent on February 23, 2021, with traded volumes up more than
115% year-over-year.
Customers are trading ICE Marine Fuel contracts as outright
futures, time spreads, differentials to High Sulphur Fuel Oil,
Brent, or Low Sulphur Gasoil. So called “5GOs” - where customers
trade 0.5% Marine Fuel Differentials to ICE Low Sulphur Gasoil -
are increasingly used. Since launch in December 2020, more than
18,000 lots of 5GOs have traded, equivalent to a notional value of
115 million barrels of marine fuel.
Alongside this, ICE is seeing record activity in the Wet Freight
complex, which hit a series of Open Interest records through
February as the market increasingly pre-hedges future exposure to
freight markets. Customers use Wet Freight futures and options to
manage price risk associated with shipping oil and Open Interest
stands at a record of more than 106,000 lots, equivalent to more
than 106 million tonnes. In February, Cal25 trades in Wet Freight
took place for the first time reflecting how as liquidity grows,
customers are comfortable taking positions as far out as 2025.
“Just over a year on from IMO 2020 implementation, we are seeing
record growth across our Marine Fuel and Wet Freight contracts as
refiners, shippers and trading companies from every continent
across the world turn to these products to hedge exposure to global
oil and maritime markets,” said Jeff Barbuto, Global Head of Oil
Markets at ICE. “Maritime transport is central to the global
economy, with an estimated 80% of world trade carried by sea. This
means that our customers need a wide range of precise tools to help
them hedge their shipping fuel exposure and as these markets get
more liquid, it attracts participants to explore using these
instruments to manage risk.”
About Intercontinental Exchange
Intercontinental Exchange
(NYSE: ICE) is a Fortune 500 company and provider of marketplace
infrastructure, data services and technology solutions to a broad
range of customers including financial institutions, corporations
and government entities. We operate regulated marketplaces, including the New York Stock Exchange, for the listing,
trading and clearing of a broad
array of derivatives contracts and financial securities across
major asset classes. Our comprehensive data services offering supports the
trading, investment, risk management and connectivity needs of
customers around the world and across asset classes. As a leading
technology provider for the U.S. residential mortgage industry,
ICE Mortgage Technology
provides the technology and infrastructure to transform and
digitize U.S. residential mortgages, from application and loan
origination through to final settlement.
Trademarks of ICE and/or its affiliates include Intercontinental
Exchange, ICE, ICE block design, NYSE and New York Stock Exchange.
Information regarding additional trademarks and intellectual
property rights of Intercontinental Exchange, Inc. and/or its
affiliates is located here. Key
Information Documents for certain products covered by the EU
Packaged Retail and Insurance-based Investment Products Regulation
can be accessed on the relevant exchange website under the heading
“Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 -- Statements in this press release regarding
ICE's business that are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion
of additional risks and uncertainties, which could cause actual
results to differ from those contained in the forward-looking
statements, see ICE's Securities and Exchange Commission (SEC)
filings, including, but not limited to, the risk factors in ICE's
Annual Report on Form 10-K for the year ended December 31, 2020, as
filed with the SEC on February 4, 2021.
ICE- CORP Source: Intercontinental Exchange
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ICE Media Contact: Rebecca Mitchell Rebecca.Mitchell@theice.com +44 7951 057
351
ICE Investor Contact: Warren Gardiner Warren.Gardiner@theice.com 770-835-0114
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