- Shanghai’s INE has adjusted its container shipping index twice within a week as prices surged by 20% following Red Sea vessel attacks.
- The exchange raised margin ratios and widened trading bands due to market uncertainties caused by shipping capacity reductions and increased costs from rerouting due to recent attacks.
- Despite global shipping rates sharply climbing in recent weeks, they still remain notably below pre-pandemic levels.
Price Surge
Shanghai’s INE responded to surging prices after vessel attacks in the Red Sea by adjusting trading requirements for its container shipping index twice within a week.
The April container shipping index skyrocketed by 20%, marking a 78% gain since the prior week, driven by anticipated shipping capacity reductions and increased costs from rerouting due to attacks by the Iran-aligned Yemeni Houthi militant group.
This prompted major shipping firms to reroute away from the Suez Canal for safety reasons. The exchange alerted investors to the increased risks currently.
Market Adjustments
The market’s current uncertainties prompted the Shanghai exchange to increase margin ratios and widen trading bands starting Wednesday, aiming to curb value fluctuations. Specifically, for April and June contracts, the margin ratio will rise to 22% from 19%, while the trading band will expand to 20% from 17%.
Meanwhile, for August, October, and December contracts, the margin ratio will adjust to 20% from 17%, and the trading band will widen to 18% from 15%. Despite recent sharp increases, global shipping rates remain notably below pre-pandemic levels.
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Source: Reuters
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