India : Steel Billet Futures Contract Relaunching After a Gap of 6 Yrs
Mining News Pro - Indian Commodity Exchange Limited (ICEX) is launching Monthly Futures Contract for Steel Long product covering Billets and Ingot. ICEX is a commodity derivative online trading platform approved and registered by Securities and Exchange Board of India (SEBI).
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Talking to SteelMint, ICEX`s Regional head (East) Shirshendu Majumdar confirmed the information said “we are launching contract for steel long commodity. Initially, the contract will cover non-BIS (Bureau of Indian Standards) ingot and billets only”.

He added “this is commodity derivative exchange for steel trading. The commodities are Ingot and Billets, and more commodities are likely to be added. The upcoming contract launch is of steel long covering Ingot and Billets. But prior to this contract launch, we are organizing awareness seminar programs for investors and all steel associations”. However, we are not selling anything, we are an exchange authorized by the Ministry of Finance, GOI

ICEX Sr Manager Adish Singhal said that “National Commodity and Derivatives Exchange (NCDEX) last steel contract was valid till August 17, 2012. Steel prices in the past 12-18 months had shown strong price movement which indicates a need for hedging tool in the market. Keeping this in mind, ICEX decided to launch steel long contract.”

Why Non-BIS?: ICEX`s Regional head said “Ingot and Billets are semi-finished goods and they are being used as basic raw materials. As it is an open market, so we decided to go with non-BIS. Later on, as per market demand along with the approval of SEBI, we will go with BIS”.

Price & Hedging: In the commodity market, prices of commodities are heavily fluctuating all the time this creates a risk of potential loss which is always present. To cover this risk, hedging is required. Hedge is a risk management technique that is used to reduce any substantial losses or gains suffered by manufacturer or investor.

Money margin: Majumdar clarified that margins have been decided by SEBI. Money margins are initially low to increase participation in future market. Currently margin for trade is at 5% and subsequently, it may increase.

Specifications of Steel Long contract:
> Contract commencement day will be the sixth day of contract launch month. The fifth day of contract expiry month has been fixed as Last Trading Day.
> Trading period is fixed from Monday to Friday between 10.00 a.m. to 11.30 / 11.55* p.m (* due to US daylight saving timings).
> As per contract specifications of steel long, 10MT is decided as the trading unit and price of Ex - Ghaziabad (exclusive of GST and other levies, but inclusive of basic customs duty and other related duties in case of imports) will be quoted.
> Maximum Order Size fixed at 500MT and initial margin set at Min. 4 % or VaR whichever is higher and in addition to this, ELM of 1% shall be levied. The provisions of Risk> Management in terms of the SEBI Circulars shall be applicable.
> Delivery will be done in the form of electronic warehouse receipt in the unit of 10 MT or multiples of 10 MT. Tolerance limits of variation in quantity at the time of delivery is fixed at +/- 3% or 5 MT, whichever is lower. Delivery center is decided within 50 kilometers of the municipal limits of Ghaziabad.

Quality Specifications of Billets and Ingots

1) Mild Steel (MS) Ingots Size 3 1/2 * 4 1/2 inch
Chemistry:
Carbon content upto 0.3 % max, Manganese minimum 0.4 %, Sulphur upto 0.06% max, Phosphorus up to 0.09% max, Sulphur + Phosphorous upto 0.14% max

Weight, length and other requirements
Weight min of 90 Kgs per ingot, Length min of 48 inches per ingot
Heat number to be mentioned on each ingot, Ingots without harmful and ppreciable hollowness, piping, and rising.
Ingots must have reasonably plain surface. Ingots must be free of harmful refractories

Additional Delivery Grade. (Premium Grade) :
2) Mild Steel (MS) Billets
Size: 100*100 to 110*110 mm, Length: 6 m +/- 200 mm, Chemistry of Billet to be same as Mild Steel Ingot, Heat number to be mentioned on each Billet.


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