Singapore — The Indian Commodity Exchange hopes its new steel long futures contract will gain traction in the market after it saw an overall 783 lots traded on the first trading day Tuesday, an ICEX spokesman said Wednesday.
Trading began with three contracts, expiring in November 2018, December 2018 and January 2019, which can be traded for ingots and billets in identical trading lot sizes and delivery units of 10 mt.
On its inaugural day, the November contract led with 758 lots traded followed by the December contract with 25 lots. No trades were recorded for the January contract, ICEX data showed.
"The availability of futures trading in steel long... provides the industry with a more structured and healthy price discovery platform, as well as provides a national level benchmark price as a ready reference for the participants, enabling them to mitigate their price risk," ICEX said.
"There are few successful contracts outside of China," said Petter Kolderup, regional manager of Asian metal derivatives at S&P Global Platts, noting that "steel futures on the Chinese SHFE [Shanghai Futures Exchange] are among the biggest futures contracts in the world in terms of volume."
"The concept of a virtual steel mill where participants in the steel supply chain can manage price risk in all aspects of the chain is still in development. So far volumes in the raw materials like iron ore, scrap and coking coal have seen better traction with the IODEX 62% Fe iron ore on SGX [Singapore Exchange] in the lead with monthly volumes of 111.4 million mt in 2017. Steel has been the missing part in the puzzle," Kolderup said.
