Recently, as the Red Sea crisis continues to ferment, a number of shipping companies have announced the suspension of the Red Sea-Suez shipping route, and the related sea freight rates have risen rapidly. Affected by this, some shipping futures contracts have continued to rise and fall, and market volatility has intensified. In order to prevent risks, the exchange has recently introduced a series of measures.
Shipping futures continue to rise and fall
On December 21, the main EC2404 contract of container transportation index (European line) futures closed at 1236.8 points, an increase of 10%. From the perspective of positions, the position increased by 19,000 to 130,000 contracts on the same day, and the market divergence increased. The performance of non-main contracts has been different, and the price of long-month contracts has even fallen sharply.
It is worth noting that this is the second consecutive day of the EC2404 contract after the previous trading day, and the increase in the past four trading days has reached 38%, and the futures price has also hit a new high since its listing.
The heating up of the situation in the Red Sea is undoubtedly the driving force behind the rise in this round of shipping futures. Recently, frequent attacks on ships in the Red Sea, the Bab el-Mandeb Strait and nearby waters, and the world's major container shipping companies have announced that they will suspend their container ships in the Red Sea and nearby waters, which has led to the increase in related freight rates.
Jia Ruilin, a shipping researcher at Galaxy Futures, pointed out that under the background of the recent fermentation of the Red Sea crisis and the choice of a number of container shipping companies to deviate, the shipping spot quotation has risen sharply, and Maersk and other shipping companies have raised the freight rate again in late January, and the bullish sentiment has pushed up the market. At present, the main contract EC2404 holds about 130,000 contracts and closes with a daily limit. However, the future evolution of the Red Sea conflict is uncertain and risky, and the subsequent trend depends on the ship's deviation and the size of the supply and demand gap of capacity, so it is still necessary to track the evolution of the Red Sea situation and the capacity deployment of the shipping company.
Du Bingqin, an energy and chemical analyst at Everbright Futures, said that the recent container transportation index (European line) futures are still disturbed by geopolitical tensions as a whole. Major airlines, including Hyundai Merchant Marine and Yang Ming Shipping, announced the suspension of the Red Sea route, and if the ships on the Far East-Europe route bypass the Cape of Good Hope, it is expected to increase the sailing time by 8-9 days, and the sailing distance will increase by 3200 nautical miles to 3500 nautical miles, which will greatly increase the cost of capacity, and it is expected that the short-term container shipping market capacity will remain tight. In addition, the back structure of the recent container shipping index (European line) futures reflects the market's expectation of the current "Red Sea Event" impact cycle. Now in the pre-Spring Festival stocking and shipment tide, the ship bypass is expected to extend the peak demand season to about March next year, so the front-month contract EC2404 has risen most obviously, and after the Spring Festival is the traditional off-season for container demand, the market expects that the impact of the Red Sea suspension on the supply of market capacity will gradually subside, so the long-month contract will not rise as much as the near-month. Against the backdrop of the current risk events, the volatility of the short-term EC front-month contract is expected to remain high.
The exchange introduced measures, and experts warned of risks
In order to prevent and control market risks, the exchange has introduced a number of measures for shipping futures.
On December 20, the Shanghai International Energy Exchange issued a notice announcing the adjustment of the margin ratio and price limit of the container transportation index (European line) futures trading. Starting from the close of settlement on December 21, 2023 (Thursday), the trading margin ratio of the container transportation index (European line) futures EC2404 and EC2406 contracts will be adjusted to 14%, and the price limit will be adjusted to 12%. In addition, starting from the trading on December 22, 2023, the intraday closing transaction fee of the container transportation index (European line) futures EC2404, EC2406, EC2408, EC2410 and EC2412 contracts will be adjusted to 4/10,000 of the transaction amount.
The relevant person in charge of the Shanghai Futures Exchange said that it will continue to track and analyze the market operation situation of the varieties, do a good job in price monitoring, position monitoring and behavior supervision, increase the supervision of the actual control account that is not truthfully declared, prevent the impact of illegal transactions on prices, strictly investigate the clues of violations of laws and regulations that undermine the price formation mechanism and infringe on the legitimate rights and interests of all parties, severely crack down on violations of laws and regulations in accordance with the law, and maintain the stable operation of the market.
Market participants said that due to the recent obstruction of the Red Sea route, the market has increased the long-short divergence on the container shipping index (European line) futures, and the exchange has introduced measures such as insurance and board expansion, which will help prevent and control possible market risks, and also help remind traders to control risks and participate rationally. At the same time, market participants suggested that both futures companies and traders should strengthen risk control and do a good job in position management.
"Under the background of the current sharp rise in the disk, the EC front-month contract has risen for four consecutive trading days, but once the Red Sea crisis is resolved and navigation is restored or the spot price is loosened, the premium brought by the war risk premium on the disk may be squeezed out, and the increase in the volume and position of the EC front-month contract on the 21st has narrowed, which also shows that the market trading divergence has increased, and the volatility is expected to increase after the disk rises to a high level. In this context, the exchange has introduced risk control measures in a timely manner, which will help calm the overheated market sentiment caused by the recent emotional fermentation and guide the market sentiment to return to rationality. Jia Ruilin said.
Editor-in-charge: Wang Lulu
Proofreading: Zhu Tianting