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The main exchange BSE on Thursday announced the start of trading in delivery-based futures contracts on carbon steel billets, which will provide a risk hedging instrument for stakeholders.
The futures contract was designed jointly with SUFI with the needs and participation of industry participants in mind, the exchange said in a statement.
Sajjan Jindal, Chairman and CEO of JSW Group, which launched BSE’s steel billet futures contract, said unlike other commodities, India’s steel industry lacks a transparent benchmark to fix prices or a way to compensate for the risk of price movement.
With the introduction of BSE steel billet futures, the physical steel supply chain would be in a better position to mitigate price risk and volatility, he added.
“The launch of the steel billet futures contract is part of our long-term vision to deepen product offerings and expand the commodity derivatives market in India,†said Ashishkumar Chauhan, Managing Director general and CEO of ESB.
“We are confident that this contract will provide an effective risk coverage instrument for stakeholders associated with the steel business and look forward to broader stakeholder participation across the country,” he added.
Nikunj Turakhia, President of SUFI, said the SUFI ESB steel billet futures prices will serve as a benchmark price for the steel trading community.
ESB and SUFI are confident that players in the physical steel market will be able to compare the different steel products they market against the price of ESB SUFI steel billets.
The trading unit will be 10 MT, with a base value of Rs per MT. The tick size (minimum price movement) of the contract is Rs 10, while the maximum order size is set at 500 MT, deliverable to Raipur (up to a radius of 50 km from the municipal limits).
In terms of quality specifications, the carbon steel billets must meet the BIS standard for A-grade carbon steel and the billets must be free of harmful elements.
(This story was not edited by Business Standard staff and is auto-generated from a syndicated feed.)
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