Shanghai Shipping Exchange works to lower risk

SHANGHAI - The Shanghai Shipping Exchange on Wednesday began offering derivatives meant to protect shippers from the risks posed by the fluctuating cost of shipping coal on two domestic routes.

The derivatives will apply to dry-bulk carriers that have deadweight capacities of 40,000 to 50,000 tons on routes going from Qinhuangdao to Shanghai and Guangzhou. A freight rate is the price charged for taking a certain piece of cargo from one place to another.

The new derivative will be settled in yuan in accordance with a freight-rate index the exchange also introduced on Wednesday. The derivatives will be sold in lots, one of which will be equal to 100 tons of cargo. The exchange will require 20 percent of margin from each trader.