National Commodity & Derivatives Exchange Limited (NCDEX) will relaunch the Steel Futures contract on Monday, January 18, 2021, a release issued by the exchange said on Thursday.
Initially, contracts will be available for the months expiring in February 2021, March 2021 and April 2021. With this launch, the first in this year, NCDEX has re-entered the non-Agri space expanding the bouquet of derivative products.
India is the 2nd largest steel producer in the world and it mainly caters to the Infrastructure and Construction industry. The major steel-producing states in India are Punjab, Chattisgarh, West Bengal, UP, Orissa and Gujarat.
The steel industry is the heart of global development. It is considered crucial for the development of the economy and is considered the backbone of human civilization.
The importance of steel to the economy can be further verified by the fact that level of per capita consumption of Steel is treated as an important index to measure the level of socio-economic development and living standard of the people of a country. All major economies around the world have been largely shaped by the strength of their steel industry in their initial years of development.
- Benchmark Futures contract for Steel Long
- Hedging and price risk management tool for value chain
- Efficient and transparent price discovery
- Robust delivery mechanism
- Connects the entire value chain
Commenting on the launch, Vijay Kumar, MD & CEO, NCDEX, stated, “India is on the cusp of exponential growth in infrastructure sector due to government impetus on making the country a $5-trillion economy in the coming years. As a result, the consumption of steel is likely to take a quantum leap ahead.
As the price of steel is a major component of total cost in many infra-projects, developers find it difficult to manage the volatility in steel prices in absence of an appropriate hedging platform in the country. The steel contract being launched by us will provide these entities with a reliable and transparent risk management tool to hedge against volatile prices.”
Mr Kapil Dev, EVP & Head of Business & Products, NCDEX stated, “India’s steel consumption is probably going to develop at a lot sooner tempo as over Rs. 44 lakh crore value of initiatives is already being applied out of Rs. 111-lakh-crore National Infrastructure Pipeline (NIP).
Even the home manufacturing and exports are additionally on the rise at a brisk tempo. On the opposite hand, logistical and provide inefficiencies have made steel and its uncooked materials cost extraordinarily unstable posing challenges to the complete worth chain individuals. Because of this, having a steel futures contract at this level of time has an amazing utility for producers in addition to customers to handle their value dangers.’’
- Ticker symbol – STEEL
- Trading Unit – 10 MT
- Delivery Unit – 10 MT
- Maximum Order Size – 500 MT
- Tick Size – Rs.10 (per MT)
- Hours of Trading- Mondays through Fridays: 9:00 A.M. to 9:00 P.M.
- Quantity Variation – +/- 3% or 5MT (whichever is higher)
- Minimum Initial Margin- 8%
- Delivery Center – Mandi Gobindgarh, Ghaziabad (Uttar Pradesh)
- Delivery Logic – Compulsory Delivery
- Delivery Specification – Upon expiry of the contracts all the outstanding open positions shall result in compulsory delivery.
- Due date/ Expiry Date 20th day of the delivery month – If 20th happens to be a holiday, a Saturday or a Sunday, then the expiry date (or due date) shall be the immediately preceding trading day of the Exchange, which is other than a Saturday