ICEX launch's Steel Long Futures Contract

SEBI regulated online commodity derivative exchange Indian Commodity Exchange Limited (ICEX) on 28th Aug'18 launched steel long futures contract on its nationwide trading platform.

The futures trading in steel long will provide the industry with a more structured and healthy price discovery platform as well as a national level benchmark price as a ready reference for the participants, enabling them to mitigate price risk. It also fulfills the demand of steel industry participants for hedging tools.

On the launching day, three contracts expiring on November 5, 2018, December 5, 2018, and January 4, 2019 are available for trading. The price is quoted ex-warehouse Ghaziabad (basis centre) exclusive of GST and other levies, but inclusive of basic customs duty and other related duties in case of imports. The trading lot size and delivery unit of the contract is 10 MT, with compulsory delivery at Ghaziabad the designated delivery location.

The Mumbai based derivative exchange is expecting participation of stakeholders including, traders, importers, exporters, manufacturers, and infrastructure industry among others, who are looking to hedge their price exposure.

Elaborating about launch, MD & CEO, ICEX Sanjit Prasad said, "Steel industry is exposed to the tremendous price volatility. In last one year steel spot prices rose by 40% to reach peak in June 2018 and then came down by 10% from its peak and currently again in upward trend. The launch of steel long futures contract serves the immediate need of market participants".

With India well poised to become 2nd largest manufacturer of steel producing approximately 100 million MT, amidst high price volatility of around 16% annualized, ICEX steel futures would not have come at such a right time.

Around 50% of Indian steel production is used directly in the construction sector, which is the 2nd biggest contributor to Indian GDP. With the Government of India pushing infrastructure development such as road construction, laying of railway lines, construction of new airports, a strong need for a domestic benchmark steel price is being felt by the Steel Long value chain participants.