Experiencing opportunities after vacuum created with the closing of contract on the National Commodity & Derivatives Exchange (NCDEX), the Multi Commodity Exchange (MCX) launched steel contracts conforming to the quality of the Bureau of Indian Standards (BIS).
Mild steel ingots / billets contract launched last week for delivery in December 2012 and January 2013, has received overwhelming response with open interest (OI) for near month contract quadrupled to 2,440 tonnes on October 30 since the beginning of its trade on October 23. Traded quantity, however, remained fluctuated with volume of trade ended at 2,750 tonnes from 17070 tonnes on the first day of trade.
For January contract also OI shot up steadily to 1,270 tonnes from 920 tonnes in the first seven days of trade. But, traded volume on October 30 stood at 1030 tonnes from 4,020 tonnes on October 23.
“The initial response is fairly good,” said an MCX official.
Meanwhile, NCDEX discontinued its steel long contract in pursuance of the gazetted order issued by the Ministry of Steel on March 12 this year.
According to Ramesh Iyer, Product Head in charge of ferrous metal, the steel long contracts were discontinued a couple months ago in consonance with the gazette order by the Ministry of Steel which mandated to maintain a specified quality of all steel products traded on exchange platform.
“The norm was already in place but, never made mandatory. Since, the contract was not in tune with quality specified by the Bureau of Indian Standard (BIS) and adopted by the Ministry of Steel, we had to discontinue the product. However, we have applied for approval of the revised contract in line with the BIS norms with the commodity derivatives markets regulator, the Forward Markets Commission (FMC). The approval is still awaited,” Iyer added.
An NCDEX circular dated July 27 said, “It is hereby informed that futures contracts in Steel Long expiring in September 2012, October 2012, November 2012 and December 2012 currently being traded on the Exchange are closed out after closing of trade on July 27, 2012. Accordingly, outstanding positions in the above referred contracts at the close of trading on July 27, 2012 will be closed out at the daily settlement prices (closing prices) as on July 27, 2012.”
The difference in old and new contract is just the chemistry suiting to consumer markers, Iyer said.
NCDEX applied for the new contract approval early this month. Before closure, the exchange was generating between Rs 50-60 crore of daily average turnover.