Iron ore shipments to China slow down

Crude oil trades in the 'A' group commodity futures on Multi Commodity Exchange of India Ltd. (MCX) peaked at Rs 114.90 crore for the April 2005 contract on March 23, the exchange reported today.

The exchange thanked traders, industry players and other participants in the energy segment for notching up the peak daily turnover of Rs 114.90 crore.

The exchange said it was at present recording average daily volumes of 4,00,000 barrels with an open interest position of equal volume, signifying healthy growth of volumes in all commodity segments.

MCX crude oil futures average daily volumes have crossed Rs 70 crore.

Jignesh Shah, managing director of MCX, said, "The systematic volume rise and net open position in another 'A' group commodity asset class like crude oil demonstrates commitment to build a trustworthy and transparent market place. Organic growth in volumes at MCX is driven on sound fundamentals and in commodities with global reference ability. This has a huge growth potential as spot to future multiple is ranging below Re 1, which is a very healthy sign. It becomes even important as our annual import cost of crude is around Rs 94,520 crore." The MCX crude oil futures contract is designed for the end user in the oil sector.

At present, the country's crude oil requirement is around 120 million ton, of which only 35 million ton is produced indigenously.

The balance 70 per cent of the requirement is met through imports.

Imports have led to high freight costs and as crude oil prices and freight costs are interlinked, volatility in crude oil prices affected the economy adversely. Traders can hedge their risk using MCX crude oil contracts. High oil prices have led to increased input costs across all sectors.

Transporters and airline companies can hedge the risk of rising diesel and petrol prices or rising jet kerosene prices by taking a hedge in crude oil futures, which would is be far cheaper than buying physicals for protection against rising crude oil prices, said MCX.

Crude futures could thus be used by the government and corporate and retail users to minimise the impact of rising oil prices through the MCX hedging option.

Users of petro-products and petrochemicals are also affected by high crude oil prices.

The key feature of the crude oil contract is its high price correlation with benchmark global exchanges, such as The New York Mercantile Exchange, Inc (NYMEX), The Tokyo Commodity Exchange (TOCOM) and The International Petroleum Exchange of London Limited (IPE), MCX said.

Low impact cost and thin spread between buy and sell are other important characteristics of the contract, it added.

The exchange had earlier witnessed record delivery performance and settlement in its gold and silver contracts, MCX pointed out in its media release.

MCX since inception has maintained leadership in bullion contracts.

MCX, a de-mutualised multi commodity exchange, has been promoted by State Bank of India, State Bank of Indore, State Bank of Hyderabad, State Bank of Saurashtra, SBI Life Insurance Co. Ltd, Canara Bank, Corporation Bank, HDFC Bank, Bank of India, Union Bank of India and Bank of Baroda and the software company Financial Technologies Ltd.

MCX at present clocks average daily turnover of Rs 1200 crore, offering futures trading in agri-commodities, bullion, crude oil, food grains, fibre, metals-ferrous and non-ferrous, pulses, plantations and other commodities.