India: NCDEX to re-launch steel long futures contract on 18 Jan’21

The National Commodity & Derivatives Exchange Ltd (NCDEX) is re-launching steel long contracts from 18 Jan’21 for mild steel (MS) billets and ingots (BIS 2830 and 2831), SteelMint has learned from sources.

The main delivery centre is Mandi Gobindgarh in Punjab, while Gaziabad in Uttar Pradesh is an additional delivery centre. NCDEX has received the necessary approval from regulator SEBI to launch the contract. Futures contracts expiring in the months of February, March and April’21 would be available for trading from 18 Jan’21.

The quality specifications for the modified contract are in conformity with BIS. While the maximum sulphur and phosphorous content in MS billets and ingots with a plain surface are 0.06% and 0.075% respectively, the maximum carbon content is 0.3%. The 100×100 mm and 110x 110 mm billets and the 3.5×4.5 inch ingots should have the heat number mentioned on them.

Upon expiry of the contracts all the outstanding open positions shall result in compulsory delivery. During the tender period, if any delivery is tendered by the seller, the corresponding buyer having open position shall be bound to settle by taking delivery on the second day after the tender date from the delivery centre. The tender period would be the last 5 trading days (including expiry day) of the contracts.

NCDEX has fixed a daily price limit for contracts at +/- 4%. Once the 4% limit is reached, after 15 minutes the limit shall be increased further by 2%. Trading shall be permitted during the 15-minute period within the 4% limit. After the daily price limit is enhanced, trades shall be permitted throughout the day within the enhanced total daily price limit of 6%.

The final price settlement (FSP) shall be arrived at by taking the average of the last polled spot prices of the last three trading days – the expiry day and 2 more days after that.

NCDEX’s re-launch of long steel contracts comes close on the heels of the Steel Users Federation of India (SUFI) and BSE jointly launching a futures contract in steel billets to facilitate risk-hedging for traders.