Glossary
27 key terms across energy, metals, agricultural, and freight markets.
- Backwardationgeneral
- A market structure where spot prices are higher than forward prices. Signals tight nearby supply. Discourages storage and incentivises immediate delivery.
- See also: contango, convenience yield
- BCI— Baltic Capesize Indexfreight
- A sub-index of the BDI tracking time charter rates for Capesize vessels (150,000+ DWT). Driven primarily by iron ore and coal flows on long-haul routes.
- See also: BDI, Capesize, C5TC
- BDI— Baltic Dry Indexfreight
- The headline benchmark for dry bulk freight rates. A composite of Capesize, Panamax, and Supramax indices published daily by the Baltic Exchange in London.
- See also: BCI, BPI, BSI, Baltic Exchange
- BHSI— Baltic Handysize Indexfreight
- Tracks rates for Handysize vessels (15-35k DWT), the smallest and most flexible dry bulk class. Used for regional and coastal trades.
- See also: BDI, Handysize
- BPI— Baltic Panamax Indexfreight
- A sub-index tracking Panamax vessel rates. Panamax ships (60-80k DWT) transit the Panama Canal and trade grain, coal, and minor bulks.
- See also: BDI, Panamax
- Brent— Brent Crudeenergy
- The global benchmark for crude oil pricing. A light, sweet crude blend from the North Sea. Most internationally traded crude grades are priced at a differential to Brent.
- See also: WTI, Dated Brent, ICE futures
- BSI— Baltic Supramax Indexfreight
- Tracks rates for Supramax vessels (50-60k DWT). Supramaxes often have onboard cranes, giving them maximum port flexibility.
- See also: BDI, Supramax
- Bunker— Bunker Fuelfreight
- The fuel used by ships. Bunker costs are a major variable in voyage economics. On time charters, the charterer pays bunkers; on voyage charters, the shipowner does.
- See also: voyage charter, VLSFO, scrubber
- CIF— Cost, Insurance and Freightgeneral
- Incoterm where the seller is responsible for cost, insurance, and freight to the destination port. Risk transfers when the cargo crosses the ship's rail at origin.
- See also: FOB, DES, CFR
- Contangogeneral
- A market structure where forward/futures prices are higher than the spot price. Incentivises storage (buy spot, sell forward). Common in oversupplied commodity markets.
- See also: backwardation, curve shape, storage trade
- Crack Spreadenergy
- The price differential between crude oil and refined petroleum products (gasoline, diesel). Represents the refining margin. A wide crack spread signals high refinery profitability.
- See also: margin, hydrocracking, distillation
- Demurragefreight
- A penalty payment charged to the charterer for delays beyond the agreed loading or discharging time (laytime). A major cost risk in physical commodity shipping.
- See also: laytime, layday, despatch
- DWT— Deadweight Tonnagefreight
- The maximum weight a ship can carry, including cargo, fuel, water, and stores. The primary way vessel size is classified.
- See also: Capesize, Panamax, Supramax
- FFA— Forward Freight Agreementfreight
- A financial derivative that settles against a Baltic Exchange freight index. Allows hedging of physical shipping exposure or speculative trading on freight rates. Traded OTC and on ICE.
- See also: BDI, ICE, Baltic Exchange
- Fixturefreight
- A confirmed chartering deal. 'The vessel was fixed' means a charter contract has been agreed between shipowner and charterer.
- See also: voyage charter, time charter, laycan
- FOB— Free On Boardgeneral
- Incoterm where the seller delivers the commodity to the port and loads it onto the buyer's vessel. Risk transfers at the ship's rail. Freight and insurance from that point are the buyer's cost.
- See also: CIF, DES, CFR
- JKM— Japan Korea Markerenergy
- The spot LNG price benchmark for deliveries into Northeast Asia (Japan, Korea, Taiwan). Assessed daily by Platts. The Pacific basin equivalent of TTF.
- See also: TTF, LNG, DES
- Laycanfreight
- The window of dates within which a vessel must arrive at the loading port. If the vessel arrives before the laycan, it must wait; if after, the charterer can cancel.
- See also: laytime, demurrage, fixture
- LME— London Metal Exchangemetals
- The world's primary exchange for trading non-ferrous metals including copper, aluminium, zinc, nickel, lead, and tin. Prices are used as global benchmarks.
- See also: 3-month price, cash price, warehouse stocks
- TC/RC— Treatment Charge / Refining Chargemetals
- Fees paid by mining companies to smelters for converting copper concentrate into metal. When TC/RCs are low, smelters have pricing power; when high, miners have more supply than smelter capacity.
- See also: copper concentrate, smelter, payable
- Time Charterfreight
- Hiring a vessel for a period (days, months, or years) at a daily hire rate. The charterer directs the ship and pays for fuel; the owner maintains the vessel.
- See also: voyage charter, TC equivalent, BHSI
- TTF— Title Transfer Facilityenergy
- The European natural gas benchmark hub, located in the Netherlands. The dominant price reference for European gas since 2018, replacing NBP in importance.
- See also: NBP, Henry Hub, JKM
- VLCC— Very Large Crude Carrierfreight
- The largest tanker class for crude oil transport, carrying 200,000-320,000 DWT. VLCCs operate on long-haul routes such as Middle East Gulf to Asia (the 'TD3C' benchmark route).
- See also: Worldscale, tanker, Suezmax
- Voyage Charterfreight
- A contract to carry a specific cargo from port A to port B at an agreed rate per tonne. The shipowner covers fuel (bunker) costs.
- See also: time charter, demurrage, bunker
- WASDE— World Agricultural Supply and Demand Estimatesagricultural
- The USDA's monthly report on global supply and demand for grains, oilseeds, and cotton. The most market-moving single report in agricultural commodities.
- See also: USDA, crop year, carry-out stocks
- Worldscalefreight
- A standardised tanker freight rate system. WS100 represents the 'flat rate' (breakeven) for a given route. Actual rates quoted as a percentage: WS80 means 80% of flat rate.
- See also: VLCC, tanker, TD3C
- WTI— West Texas Intermediateenergy
- The US benchmark crude. Lighter and sweeter than Brent. Trades on NYMEX. Historically at a premium to Brent but now usually at a discount due to US inland delivery constraint.
- See also: Brent, NYMEX, Cushing