NCDEX plans sponge iron futures

National Commodity & Derivatives Exchange Ltd (NCDEX) is planning to launch sponge iron futures for which it has already applied to the Forward Market Commission (FMC) for permission.

"We had applied for permission sponge iron futures quite some time back but we are yet to obtain nod from the regulator. We expect to get permission by the next fortnight," an exchange official said.

Sponge iron is a major raw material for steel making. Thus, sponge iron futures with steel ingot or liquid steel futures make sense to go hand in hand.

This is the first kind of raw metal futures in any exchange in India. "As total daily volume of steel futures is about 12,000 tonne and open interest is about 30,000 tonne, we want to start sponge iron futures of which the delivery centre could be Raipur," the official added.

Recently launched, furnace oil futures are doing well on the NCDEX but a lot needs to be done as volumes are yet to pick up substantially. But, the exchange sources are confident that sponge iron futures would do well and volume would pick up significantly.