Baltic Exchange keeps shipping indices unchanged ahead of IMO changes
Yesterday (27 March 2019) the Baltic Index Council (BIC) announced its decision on the implications of the IMO 2020 Sulphur Cap for the Baltic Exchange’s timecharter indices. As formally announced to the Baltic Exchange members, the Baltic will be adding clarificatory wording to its Capesize, Panamax, Supramax and Handysize vessel descriptions to confirm that the index vessels are not scrubber-fitted.
Explaining the consultative decision-making process, BIC Chairman Stefan Albertijn said:
“The Baltic Index Council was presented with extensive submissions and views from across the market. Our unanimous decision to clarify the vessel descriptions as a response to the IMO 2020 change in sulphur limits, involved careful examination of all the data and feedback received from the consultation process. We are confident that it is the right decision and one which best meets the needs of the shipping markets we serve.”
The clarified vessel descriptions will be applied from 1 April 2019.
The process to consider the possibility of amending the Baltic Exchange indices ahead of the IMO 2020 Sulphur Cap began in late 2017 and took in feedback from five open forum events in London, Singapore, Athens and Copenhagen; two working group sessions for Baltic Exchange members; meetings with the Baltic Advisory Councils and meetings with panellists. The Baltic Exchange also approached a wide segment of shipowners, operators and brokers for information on the anticipated extent of scrubber installation, fuel specifications and vessel performance with low sulphur fuels and scrubbers. The impact of any decision on derivatives open interest was also carefully considered and the Baltic engaged with the FFA Brokers Association (FFABA) as well as the relevant clearing houses.
A detailed consultation paper was issued to all members, the CCPs and FFABA in January 2019 summarising the feedback obtained in 2018, and providing a further opportunity to provide written feedback.
Commenting on the consultation process, Baltic Exchange Chief Executive Mark Jackson noted:
“This was a lengthy and rigorous process that underscored the robustness of the Baltic’s IOSCO-based index administrative practices. It was essential for us to take the time to gather the necessary evidence and collective feedback, ensuring that our diverse membership and the wider market was properly consulted and provided with an opportunity to be heard. I am pleased that we are able to give the market the clarity it needs.”
Source: The Baltic Exchange