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The Multi Commodity Exchange (MCX), India's largest commodity derivatives trading platform, has decided to withdraw mild steel/billets' contracts from its platform April onwards due to the lack of liquidity.
Launched on December 9 for the current year, the contracts failed to attract traders' attention due to the difference in quality in traded steel on the spot market from the specifications by the Bureau of Indian Standards (BIS). "The quality introduced by BIS is neither produced by any steel mill nor traded. Hence, this quality steel differs from the popular steel traded on the spot market. This is the reason for the lack of interest in steel contracts," said a sector official.
"Mild steel/billets' contracts shall not be made available for trading from April. Further contracts shall be made available with due notice," an exchange official said.
The contracts were very liquid till August 2012 on the National Commodity & Derivatives Exchange (NCDEX), offering trading in non-BIS standard of steel. But, in September 2012, the BIS introduced quality specification and ordered commodity exchanges to adhere to it.
Traders on the MCX will have the option to square off positions in two live forward month contracts of February 2014 and March 2014. Thereafter, contracts will not be available, the exchange official added.
"There was no trading interest in the contracts despite the quality of traded steel adhering to the BIS norms. Hence, we decided to discontinue the contracts and pay attention to liquid contracts."
