Tankers: FFA revival seen on Persian Gulf-East Aframax route
There has been a revival of freight forward agreement trade activity on the Kuwait to Singapore 80,000 mt dirty product tanker route for the first time in years, trading and FFA brokers said.
“It has picked up a bit in the last six months or so. It is still illiquid. It only trades from time to time and then it goes quiet for a few weeks,” said an FFA broker, adding that in the past month or so there has been one trade every two weeks.
The Aframax route, which in the FFA market is known as TD8, predominantly moves fuel oil to Singapore from the Persian Gulf.
The FFA for the TD8 route on Monday at settlement saw 495 lots of open interest spread across November this year to December next year, Intercontinental Exchange data showed.
In addition, around 1,050 lots this year have traded on ICE in contrast to none last year, a source said.
An FFA broker said the pick-up in the fuel oil trade to Southeast Asia from the Persian Gulf has seen oil companies and trading houses getting active on the TD8 FFA market.
The source said freight swap volumes could also rise next year with participants taking positions for Calendar 2017.
“The Cal trades would be 80,000-100,000 mt for every month. The TD8 paper market is a nice proxy if you are trading fuel oil,” the broker said.