Increasing volatility in steel prices has prompted smaller makers as well as consumers to resort to hedging their price risk on the domestic commodities bourse, company and exchange officials say.
Long steel prices have traded between 22,710 rupees and 29,650 rupees over the past three months, increasing risks for a few companies such as Ramswarup Group, Rathi Udyog Ltd., and KLM Metals who are opting for derivatives to cover their exposures.
“The demand is back and therefore it is important for us to hedge our risks against any unexpected price fluctuations… the local platform is solving our problems,” said Sanjeev Gupta, owner of Delhi-based KLM Metals.
While bigger companies such as MMTC and Essar Steel opt for international exchanges such as the London Metal Exchange (LME) to hedge their risk, smaller players are benefitting from contracts offered by NCDEX for the same purpose.
“It is difficult for us to go LME for our small hedging requirements, besides currency hedging is also needed… domestic exchanges fit our need,” said Rajesh Rastogi of Meerut-based Shyam Metals.
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