NCDEX to re-launch steel futures contract on Jan 18

The National Commodity and Derivatives Exchange (NCDEX) on Thursday said it will re-launch the steel futures contract on January 18.

Initially, contracts will be available for the months expiring in February 2021, March 2021 and April 2021, NCDEX said in a statement.

With this launch, the NCDEX has re-entered the non-agri space expanding the bouquet of derivative products.

NCDEX Managing Director and CEO Vijay Kumar said, ''India is on the cusp of an exponential growth in the infrastructure sector due to government impetus on making the country a USD 5-trillion economy in the coming years.'' He added that as the price of steel is a major component of total cost in many infrastructure 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 the NCDEX will provide these entities a reliable and transparent risk management tool to hedge against volatile prices, he added.

The steel contract will trade long steel products such as ingots and billets having a trading unit of 10 million tonne (mt).

The base centre will be Gobindgarh in Punjab, while Ghaziabad in Uttar Pradesh will be the additional delivery centre.

India's per-capita consumption of steel grew at an annual rate of 4.43 per cent to 74.10 kg in 2018-19 from 46 kg in 2007-08, the NCDEX statement said.

It added that as per the Indian Steel Association (ISA), steel demand is estimated to grow 7 per cent in 2019-20 and 2020-21.

NCDEX Executive Vice-President and Head (Business and Products) Kapil Dev said, ''India's steel consumption is likely to grow at a much faster pace as over Rs 44 lakh crore worth of projects are already being implemented out of the Rs 111-lakh crore National Infrastructure Pipeline (NIP).'' He added that even the domestic production and exports are also on the rise at a brisk pace.

On the other hand, logistical and supply inefficiencies have made steel and its raw material prices extremely volatile posing challenges to the entire value chain participants, he noted.

''In view of this, having a steel futures contract at this point of time has a tremendous utility for producers as well as consumers to manage their price risks,'' Dev added.

The NCDEX had earlier launched the steel contracts in March 2005 and continued till August 2012. It again launched the contracts in December 2012, which continued till July 2017.

As per reports, the Exchange discontinued the contracts due to changes in the government's steel norms.