Hind Copper plans to hedge on MCX

Hindustan Copper (HCL), a state-owned, Kolkata-headquartered copper major, is exploring avenues to hedge its risk on the Multi Commodity Exchange (MCX). If successful, HCL would be the first metal producer in the country to hedge on a local commodity exchange.

Sources said the company was also looking for a consultant to hedge on the London Metal Exchange (LME). But a company official said that it had put the overseas plan on hold for the time being. The official, however, confirmed the company's plan to start hedging on the MCX within a month.

"We have asked for some changes in the exchange's system and are awaiting the response. We also want changes in the overall hedging strategy. If changes are in our favour, we would proceed with the hedging," said the company official on condition of anonymity.

"We are planning to start with a low quantity and, if successful, we will go ahead with bigger lots," the official added.

Without divulging the quantum of the target, the official said that the company had set a minimum target, but it was too early to say anything about the domestic market strategy at this point of time.

Sources said HCL had sought help from the MCX to identify a global consultant and a local trader, who could hedge risk on its behalf. The MCX, reportedly, has extended all possible support and obtained an assurance from the copper producer to hedge risk on its platform.

Copper is a non-deliverable contract on the MCX. On whether its participation would include the terms to make the contract deliverable, the official said, "We are looking at the all-round potential."

HCL, the only copper mining lease licensee in the country, reported a sale of approximately 70,000 tonnes of the metal during 2006-07, with a 49 per cent capacity utilisation. The company recorded a net profit of Rs 100 crore on a turnover of Rs 1,053 crore in the year under consideration.