NCDEX plans to launch futures contract in cement
The National Commodity and Derivatives Exchange (NCDEX) plans to launch futures contract in cement.
By PTI |
MUMBAI: The National Commodity and Derivatives Exchange (NCDEX) plans to launch futures contract in cement.
“We are working on cement future contract and hopefully should launch it with in two to three months subject to approval from the forward markets commission,” NCDEX managing director PH Ravikumar said.
On the rationale behind the launch of cement contract, Mr Ravikumar said cement prices were rising and a futures contract will provide a mechanism for better price realisation.
During the past one year, cement prices have shot up by 18-20% from Rs 185-190 for a 50-kg bag to Rs 225. Currently, prices in the north and west are around Rs 225 per 50 kg bag, and in south it is around Rs 200 per 50 kg bag.
The major reason contributing to rising prices is the increasing construction activity, which has fuelled demand for the commodity.
Mr Ravikumar said for any commodity to trade on the exchange at least producers or buyers need to be fragmented. There also should be reasonable volatility in prices, he said.
“In case of cement, buying is totally fragmented with segments such as builders and construction companies. The consumer segments are numerous while producers are just a few,” Mr Ravikumar said.
The exchange is still in the process of fine-tuning details, he said. The Indian cement market is the world’s second-largest after China with a domestic consumption of close to 135 mt and an installed capacity of 160 mt. Leading players in the industry include Associated Cement Companies, UltraTech Cement, Gujarat Ambuja, Grasim, JK Cement and a few other small players.
“We are working on cement future contract and hopefully should launch it with in two to three months subject to approval from the forward markets commission,” NCDEX managing director PH Ravikumar said.
On the rationale behind the launch of cement contract, Mr Ravikumar said cement prices were rising and a futures contract will provide a mechanism for better price realisation.
During the past one year, cement prices have shot up by 18-20% from Rs 185-190 for a 50-kg bag to Rs 225. Currently, prices in the north and west are around Rs 225 per 50 kg bag, and in south it is around Rs 200 per 50 kg bag.
The major reason contributing to rising prices is the increasing construction activity, which has fuelled demand for the commodity.
Mr Ravikumar said for any commodity to trade on the exchange at least producers or buyers need to be fragmented. There also should be reasonable volatility in prices, he said.
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“In case of cement, buying is totally fragmented with segments such as builders and construction companies. The consumer segments are numerous while producers are just a few,” Mr Ravikumar said.
The exchange is still in the process of fine-tuning details, he said. The Indian cement market is the world’s second-largest after China with a domestic consumption of close to 135 mt and an installed capacity of 160 mt. Leading players in the industry include Associated Cement Companies, UltraTech Cement, Gujarat Ambuja, Grasim, JK Cement and a few other small players.
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