Responsive Maritime Partners. Risk management

Transcription

1 Responsive Maritime Partners Risk management

2 LOWER AND MANAGE YOUR BUNKER COSTS WITH RISK MANAGEMENT KPI BRIDGE OIL CAN SOLVE YOUR PROBLEMS WHEN Bunker price increases hurt your business You need bunker costs to fit into a budget It is hard to pass on increasing bunker costs to your customers You want to take advantage of a good buying opportunity forward in time Oil and bunker markets are volatile and the unpredictable price movements are beyond your control. But what you can do is to lower and manage your bunker costs and bridge the gap between your income and bunker expenses. Considering that bunkers amount to percent of daily operating costs on an average vessel, hedging can be crucial for your results. LET S DEFINE A RISK MANAGEMENT STRATEGY THAT SUITS YOUR NEEDS Hedging is not speculation! It is minimising and managing your risk, taking away the price uncertainty - while doing nothing is speculating on lower bunker costs. KPI Bridge Oil can help you identify your risk management needs and define a tailor-made strategy matching your specific business model and commercial situation. Our hedging tools are simple, efficient and easy to use. Let us guide you through the hedging process, every step of the way!

3 FIXED FORWARD PRICE (FSP & FPA) MAXIMUM PRICE AGREEMENT (MPA) Spot price Your Fixed Your Maximum Time Your price Time FIXED SPOT PRICE (FSP) Fix your bunker buying price up to 3 months before delivery Single or multiple liftings No vessels name or precise ETA needed No minimum deal size/maximum 10,000 MT Multiple port delivery option OUR PHYSICAL SETTLEMENT TOOLS GUARANTEE YOUR BUNKER PRICE AND ENSURE YOUR FUEL SUPPLY We offer a range of physical settlement tools which guarantee the physical fuel delivery in the ports of your choice. FSPs and FPAs give you 100% price certainty and follow the same procedure as spot deliveries. With MPAs you can cap your fuel costs and still benefit from falling prices. FIXED PRICE AGREEMENT (FPA) MAXIMUM PRICE AGREEMENT (MPA) Fix your bunker buying price as far forward in time as you like No deal size limit. You can buy years ahead of delivery Multiple port delivery option Simple, short Master Agreement to be signed Credit line can be extended for risk management You may be required to pay margin calls (only in case of extreme market drops) Works like an insurance policy for a physical supply contract Fix a maximum price you are willing to pay for your bunker Benefit from falling prices Pay upfront insurance premium, which gives the right to buy at a pre-agreed price Ideal to fit bunker purchases to a budget, while still able to take advantage of downside

4 SWAPS FUTURES (GASOIL ONLY) Monthly average KPI pays you KPI pays you Your Swap You pay KPI Your Future You pay KPI FINANCIAL SETTLEMENT TOOLS Get a cash compensation if your bunker costs increase. We offer the full range of financially settled hedging tools: Swaps, Futures and Options. FUTURES (GASOIL ONLY) Fix your purchase price, not your physical supply (flexibility) Standardized and exchange-traded products (transparency) Perfect hedge for Northwest Europe and US EC Pricing on day of expiry Standardized contract size (100 MT for London Gasoil and 1,000 Bbls for NY Heating Oil) Margin deposit is required and you may need to pay margin calls SWAPS Fix purchase price without physical supply (supply flexibility) Standardized products and terms Buy as much and as far forward in time as you like Perfect hedge for ARA, Med, USGC, NY Harbour and Singapore Possible to convert to physical delivery with KPI Bridge Oil You may need to pay margin calls (only in case of extreme market drops)

5 OPTIONS: CAP Insurance contract that protects against rising prices and allows to benefit from falling prices Pay an upfront insurance premium and get the right to buy at a pre-agreed price (Cap) No margin calls The higher the cap and the closer in time, the lower the premium OPTIONS: ZERO COST COLLAR Protects against rising prices and you benefit from some fall in prices Keeps your prices within a pre-agreed range (between a cap and a floor) No premium. No costs You may pay margin calls (only in case of extreme market drops) Good to cap your prices if you would rather limit down-side benefits than pay upfront premium Monthly average Monthly average KPI pays you KPI pays you Your Cap Your Cap No settlement No settlement Your Floor You pay KPI Time Time Month 3

6 CHOOSE THE RISK MANAGEMENT STRATEGY THAT SUITS YOUR NEEDS PHYSICAL SETTLEMENTS FINANCIAL SETTLEMENTS FSP AND FPA MAX PRICE AGREEMENT SWAP OR FUTURE OPTION: CAP OPTION: ZERO COST COLLAR PRODUCT BENEFITS 100% price certainty Guaranteed fuel supply Same procedure as spot deliveries Benefit from decreasing prices Guaranteed fuel supply certainty without physical supply Flexibility in physical supply Standardized products and terms Insurance against price increases Flexibility in physical supply No security deposits Benefit from decreasing prices certainty and some benefit from decreasing prices Flexibility in physical supply No upfront insurance premium STRATEGY EXAMPLES Fix a bunker budget price Lock in your costs in a COA Take advantage of a cheap market/forward curve No security deposits Protect against dramatic price increases Cap your costs after a market fall Fix a price for large volumes of bunker over a long period of time Lock in your bunker price in advance when it makes sense for you Protect against dramatic price increases Cap your costs after a market fall Protect against dramatic price increases Cap your costs after a market fall Exercise your bullish market view at no cost

7 HOW TO WORK WITH RISK MANAGEMENT GET STARTED! 1 Get in touch with your risk manager at KPI Bridge Oil early on 2 KPI BRIDGE OIL WILL GUIDE YOU THROUGH THE ENTIRE HEDGING PROCESS Define together which strategies and tools are right for you 3 Take time to present your hedging project to your management and owners 4 Define a target and give your risk manager an order to work 5 6 kpi bridge oil helps you follow up on the hedge If markets and/or your situation change, it is more than okay to adapt the strategy 12 13

8 MANAGE AND MITIGATE YOUR BUNKER PRICE RISK Maritime DNA All major time zones Purchasing power Fuel partnership Bunker hedging is a core competence in KPI Bridge Oil and we offer our risk management expertise and tailor made hedging strategy advice to ship owners, charterers, shipping companies, liners and physical bunker suppliers all over the world. Working closely with our business partners, we help manage and mitigate bunker price risk in an unpredictable market. BENEFIT FROM OUR GROUP S HEDGING EXPERTISE, RICH MARITIME HERITAGE AND WORLDWIDE COVERAGE The financially strong KPI Bridge Oil Group is a leading bunker supplier with 8 strategically located offices in all major time zones. We have been fuelling the international marine transportation industry for over 40 years. Our global team of more than 60 experienced and dedicated brokers and traders is sourcing approx. 7-8 million tonnes of marine fuel a year. BENEFIT FROM OUR EXPERIENCE AND EXPERTISE Our rich maritime heritage and the expertise of our professionals give us the depth of knowledge, the adaptability and reliability you need. Whatever challenges you face, we can help you find the best and most innovative solutions.

9 LONDON DENMARK NEW YORK ATHENS MIAMI ISTANBUL SEATTLE SOUTH KOREA SINGAPORE kpibridgeoil.com