Thursday, April 23, 2009

Baltic Exchanged kicks out a member

The moto of Baltic Exchange is "Our Word, Our Bond".

Apparently Fortescue wasn't keeping their word.

By Alaric Nightingale and Brett Foley

April 23 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-biggest iron-ore exporter, was suspended from being a member of the Baltic Exchange, the world’s largest shipping bourse.

It’s the first suspension since 2005, exchange spokesman Bill Lines said by phone today, declining to comment further. The bourse’s 560 members include ArcelorMittal, the world’s largest steelmaker, and Glencore International AG, the biggest commodities trader.

Fortescue had some problems back in December which I posted.

An example is Fortescue Metals, who bought contracts for the future. They quoted including the freight (CFR - cost plus freight), and these orders did not materialize, or were cancelled (I guess). They have orders, but only the ones where they quoted just the cost of the product loaded onboard the ship (FOB - freight on board).

Fortescue is only suspended, so I guess if they come to terms with renegotiating all their contracts they might be let back in.

However, I doubt not being a member of the Baltic Exchange will really have any effect on them doing business. In this day of the internet, one really wonders if such exchanges are necessary.

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