The contracts are anticipated to provide insights into domestic shipping rates as well as give China a louder voice in pricing and more experience in developing financial products for the shipping industry, analysts told the local media.
The spot delivery contracts will be based on coal shipping rates from Qinhuangdao to Shanghai along the north-to-south shipping routes.
The exchange will initially offer 12 contracts ranging from January 2014 to December 2014, with an initial trading margin of 10% of the contract value before rising to 30% in the delivery month.
“Given the current excess capacity in the shipping industry, carriers can use the derivatives trading platform as a new sales channel,” Wu Di, deputy head of Shanghai Shipping Freight Exchange, was quoted saying.
Meanwhile, London-based Baltic Exchange has recently established its first office in China in Shanghai, a strategic move to develop relationships between Chinese shipping and trading companies and the international maritime community.
“China's shipping industry accounts for 60% of the global total and Shanghai is the world's largest (container) port. We welcome competition from all over the world,” Wu said.
He added that the exchange will introduce derivatives for international dry bulk carrier rates and it will also improve current derivatives for container shipping rates.
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