Initially, the contracts will be available for the months expiring in February 2021, March 2021 and April 2021. With this launch, the first this year, NCDEX has returned to the non-agricultural space by expanding the bouquet of derivatives.
Commenting on the launch, Vijay Kumar, Managing Director and CEO of NCDEX, said, “India is poised to experience exponential growth in the infrastructure sector due to the government’s push to make the country a global economy. 5,000 billion dollars in the years to come. As a result, steel consumption is likely to leap forward. With the price of steel being a major component of the total cost of many infra-projects, developers find it difficult to manage the volatility of steel prices in the absence of a suitable hedging platform in the country. . The steel contract we are launching will provide these entities with a reliable and transparent risk management tool to guard against price volatility. ”
The Steel contract will trade long steel products such as ingots and billets with a business unit of 10 MT. The base center will be Gobindgarh in Punjab while Ghaziabad in Uttar Pradesh will be the additional delivery center.
India’s per capita steel consumption increased at a CAGR of 4.43%, from 46 kg in FY08 to 74.10 kg in FY19. According to the Indian Steel Association (ISA), demand for steel is expected to grow by 7% in fiscal years FY20 and FY21.
Mr. Kapil Dev, EVP & Head of Business & Products, NCDEX said: “Steel consumption in India is likely to grow at a much faster rate than above Rs. 44 lakh crore of projects are already implemented from Rs. 111 lakh-crore National Infrastructure Pipeline (NIP). Even domestic production and exports are also growing at a steady pace. On the other hand, inefficiencies in logistics and supply have made steel and the prices of its raw materials extremely volatile, posing challenges to all actors in the value chain. In view of this, having a steel futures contract at this point has enormous utility for producers as well as consumers in managing their price risks. ”