The National Commodity and Derivatives Exchange (NCDEX) has said it will re-launch the steel futures contract on January 18, 2021. Initially, contracts will be available for the months expiring in February 2021, March 2021 and April 2021. 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 $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. He also said the steel contract being launched by the NCDEX will provide these entities a reliable and transparent risk management tool to hedge against volatile prices.
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. NCDEX said 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. 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.