SSY, the largest independent shipbroker, sees the addition of fuel oils coverage as a key part of plans to grow its derivatives franchise according to a senior executive.
Speaking to FOW after the firm last week went live with listed derivatives coverage of fuel oil markets, partner and global head of derivatives Jamie Pearce said the move is the latest in a string of expansions at the broker.
“The fuel oil sector should prove to be a good addition to our physical shipbroking business,” Pearce (pictured) said in an interview. “We fix hundreds of ships every year, so fuel oil is a natural extension of the service we already offer our clients. When we are negotiating and fixing ships, the fuel bunkering is an integral part of the negotiation. The plan is to roll that out globally.”
SSY last month added coverage of precious metals, in order to capture heightened hedging demand in the segment. The push goes alongside growth in industrial metals – particularly aluminium – at the firm.
“We are now one of the largest base metals brokers in the world as well as having a leading position in battery metals and the major freight derivatives markets,” Pearce added. “This will be an interesting year for us with the launch of our fuel oil business and our precious metals business - we feel we have all the pieces in place to be the top broker in all our markets.”
Pearce, who has been at SSY for 24 years, took over as head of SSY Futures in 2020. In that time derivatives has grown to be one of the best performing divisions at the firm last year. From the start of last year headcount has grown from 45 to 75 today across functions, according to figures from the broker.
“One of my main jobs is to link the parts of the business that we are heavily involved in on the physical side to the derivatives side,” he said. “An example of that - SSY is one of the biggest grain brokers in the world so it was logical for us to offer agricultural derivatives to our physical clients.”
SSY in August last year closed a deal to acquire Uranium Markets, a strategic play to harness future power demand in the market. The firm currently intermediates transactions for uranium certificates, which allow users like power stations to claim the physical metal held at warehouses.
“Uranium is a very interesting market, and leads on from the AI / data boom,” Pearce said. “In my opinion, that race is going to come down to power. At SSY we are heavily involved in oil, coal, gas and related markets. So by adding nuclear it gives us a foothold in that market, and as power becomes more of a focus we can benefit from growing demand as usage increases.
“One of the ideas on the horizon is to build a futures market around that physical business as well.”
