India's National Commodity & Derivatives Exchange (NCDEX) has launched steel scrap futures, the country's first futures contract in this segment based on prices reported by a price-reporting agency, according to a statement issued by the exchange on Thursday, November 12.
The exchange said that the introduction of ferrous scrap futures contracts aims to give steel producers and traders an opportunity to hedge against price risks.
The contract will be based on HMS 80:20, a widely used imported scrap grade, the exchange said.
The contract has a trading unit of 10 mt and a maximum order size of 500 mt. The tick size is INR 10 per mt, and the contract will be cash-settled based on prices at Mandi Gobindgarh, Punjab, excluding goods and services tax.
India's steel scrap market is fragmented, with prices varying by region and grade, NCDEX said.
Steel scrap is an increasingly important component of India's steel value chain. Yet there has been no exchange-traded instrument to hedge its price risk, the exchange added.
