NCDEX re-launches steel long futures

NCDEX, the leading commodity exchange has re-launched its Steel Long Contract based on the BIS 2830 grade, as is mandated by the Government of India. NCDEX is the only exchange which offered Steel Long Futures, which had become a benchmark price reference for the long products segment in the Indian steel industry. The earlier contract was discontinued after the BIS norms were mandated by the Government in September 2012. The objective is to migrate the entire steel sector towards implementation of the BIS norms and thereby provide quality steel products to consumers.

Mr. Samir Shah, MD In-Charge, NCDEX speaking at the launch said “Steel is the second most traded physical commodity after energy. In fact, as consumers of steel products, it is an integral part of our daily lives. With the relaunch of the NCDEX Steel Long Contract, we expect it to add tremendous value to the existing steel business entities and stakeholders”

The new Steel Long contract launched by the Exchange is based on BIS 2830 grade. With  the production of Billets and Ingots expected to converge to the BIS 2830 grade in the main and secondary steel sectors, this contract will aid the price discovery and facilitate hedging amongst the entire steel production chain. It will also facilitate the migration of the secondary steel sector towards early adoption and production of BIS 2830 grade, thereby aiding in the objective of the GOI.  Deliverable at seven key steel production/consumption centres across India, the contract would help the producers and consumers to lock into a forward price with the added benefit of the counter party risk mitigation provided by the Exchange. NCDEX would also facilitate the physical delivery of steel at exchange approved warehouses.

A perfect risk management tool, the futures contract gives the steel producers an opportunity to hedge their production and also give physical delivery on the exchange platform. While the consumers of steel products can lock in the purchase price for a forward month, thereby insulating them from the fluctuation in prices. "The much awaited relaunch of the NCDEX Steel Long contract provides steel producers and consumers the most comprehensive and cost-effective risk management solution in the international commodity market." added Mr. Vijay Kumar, Chief Business Officer, NCDEX.

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