FIS Bunker Digitalizes Fuel Oil Trading

Freight Investor Services launches a live bunker fuel pricing service that for the first time makes bunker hedging practical for its biggest users.

Firm bids and offers, updated in real time for six months of bunker forward curve will provide unrivalled degree of price transparency and liquidity. Ali Ersen, Bunker Broker with FIS, said: “When a shipowner knows they are performing a given voyage or charter, they can use the screen to hedge their fuel like-for-like in the volume that they need. That trade can be made with or without the assistance of the broker and they can monitor the price changes in real time through the course of the contract, adjusting their position as necessary.”

The FIS Bunker Screen automatically collates prices from multiple market-makers and provides firm bids and offers in tight spreads along six months of the forward curve. Screen prices move with the market, reflecting up-to-the-minute changes in prices of the three key bunker fuel contracts: Singapore 180CST, Singapore 380CST and Rotterdam 3.5% Sulphur Barges. Indicative prices on these three contracts for a further three Quarters and four Calendar years are also available. Indicative prices can also be provided on the US Gulf Coast 3.0% contract.

Damien King, Bunker Broker with FIS, said: “The FIS Bunker Screen is what the fuel oil swaps market has been waiting for. It is a completely new concept that puts an unprecedented level of market access in the hands of users. And because FIS offers swap contracts in lot sizes of one tonne upwards, we think that it will appeal to shipowners and charterers who need to hedge, but until now haven’t been as well-served by the market as they should have been.”

Bunker fuel prices are fed into the FIS screen automatically and cash-settled swaps can be executed directly on screen, with straight through processing to clearing at SGX, NOS and CME and by voice clearing at ICE. End-users of fuel oil and bunker blends – notably shipowners and charterers - have traditionally struggled to hedge the comparatively small volumes to which they are exposed at realistic price levels. Because the FIS Bunker Screen provides constantly updated prices in the most liquid markets, users can use it to buy or sell swaps exactly equivalent to their physical exposure.

Trading on the screen requires an FIS broking agreement and a clearing account with the providers noted above. Users can sign up for the FIS Bunker screen here.