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ICEX witnesses 590 tons of steel delivery in December contract

Dilip Kumar Jha/Mumbai 08 Dec 18 | 05:38 PM

(Light to Right) ICEX MD & CEO Sanjit Prasad, ICEX Chairman Ashok Sinha during the launch of the World's first diamond futures contract at ICEX in Mumbai on Monday, August 28, 2017. Photo: Kamlesh Pednekar

Reliance-anchored Indian Commodity Exchange (ICEX) has witnessed a sharp increase in the delivery of steel long for the second contracts expired on December 5.

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Launched in August, the first steel long contract expired in November witnessed the delivery of a mere 30 tonnes. The second contracts expired early this week, however, has seen the delivery rising to 590 tonnes due to extended participation of traders, hedgers, arbitrageurs and users on the exchange platform.

“The ICEX steel Long contracts have witnessed increased participation within a short period of time since its launch, on account of the continued volatility seen in the steel spot prices. The rise in the open interest witnessed in the contracts in the last three months does signify the value addition that these contracts are providing to the participants in their business operations," said Sanjit Prasad, managing director and chief executive officer, ICEX.

With the launch of futures contracts in steel longs, their co-relation with spot markets has increased which has attracted traders to hedge their risk on the exchange platform.

“The very high correlation of the ICEX contract prices with the underlying steel long product spot prices, that we have witnessed since launch, will encourage increased participation from across the country in the upcoming months. The successful settlement of the 2nd expiry of the contract that was due on December 5, 2018 by way of deliveries of 590 MT only strengthens the credibility of the prices traded on the ICEX platform," said Prasad.

The settlement witnessed deliveries of 590 tonnes of the underlying deliverables at the ICEX accredited warehouse at Ghaziabad.

ICEX Steel long futures contracts have seen a deposit of 720 tonnes at its Ghaziabad accredited warehouse since launch. The contracts have been witnessing higher participation in terms of traded quantity and rising open interest. The contracts have also witnessed the traded prices correlating very highly with the daily spot prices of the corresponding underlying product at key locations across India.

The contract expired in November had also witnessed the close convergence of the traded prices with the spot prices at Ghaziabad closer to the respective expiries.

ICEX Steel long contracts are the only metal (ferrous and non-ferrous) derivative contracts in the Indian commodity derivatives ecosystem, based on the compulsory delivery mode of settlement.

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