NCDEX seeks more delivery centres for furnace oil contract
NCDEX for more delivery centres for its furnace oil contract, plans to move Forward Markets Commission.
By Deepa Krishnan, TNN |
MUMBAI: National Commodities and Derivatives Exchange of India (NCDEX) plans to make a proposal to commodities regulator Forward Markets Commission (FMC) to permit more delivery centres for its furnace oil contract.
"We are set to approach FMC as 10 tonnes of the product has been delivered in the July contract on our platform out of Bharat Petroleum Corporation (BPCL) depot in Sewri, Mumbai. We are expecting more deliveries to take place in October," said NCDEX assistant vice-president (energy) Arvind Pal Singh.
This delivery signals a renewed interest in the furnace oil contracts which were launched by the exchange in October 2005 in association with BPCL. Sources said many users were keen to hedge their risks but it took a while for sellers to trade on the exchange. Besides Mumbai, the exchange has identified delivery depots in Kandla in Gujarat, Mathura in Uttar Pradesh, Haldia in West Bengal, and Chennai.
The exchange has also tied up with Vinergy International, a petroleum, petrochemicals and chemicals products marketing, distribution and logistics company, for delivery assistance for the furnace oil contracts.
Furnace oil is a dark viscous refining by-product used mainly by industries for captive power generation and other heating applications.
With the huge rise in crude prices, the commodity has seen an annualised volatility of up to 40% in the last year and is shrinking the profits of all the manufacturers who use this product.
NCDEX online trading platform aims to provide a hedging mechanism to tackle this steep price volatility.
The total market size in India for this product is close to 10 million tonnes per annum, according to industry estimates. Imports account for roughly 7-8% of the total Indian requirement.
As per RBI guidelines, domestic consumers of furnace oil are not allowed to hedge the prices in international markets if they are not importing the product. Such players can effectively hedge against furnace oil price movement by using NCDEX futures.
"We are set to approach FMC as 10 tonnes of the product has been delivered in the July contract on our platform out of Bharat Petroleum Corporation (BPCL) depot in Sewri, Mumbai. We are expecting more deliveries to take place in October," said NCDEX assistant vice-president (energy) Arvind Pal Singh.
This delivery signals a renewed interest in the furnace oil contracts which were launched by the exchange in October 2005 in association with BPCL. Sources said many users were keen to hedge their risks but it took a while for sellers to trade on the exchange. Besides Mumbai, the exchange has identified delivery depots in Kandla in Gujarat, Mathura in Uttar Pradesh, Haldia in West Bengal, and Chennai.
The exchange has also tied up with Vinergy International, a petroleum, petrochemicals and chemicals products marketing, distribution and logistics company, for delivery assistance for the furnace oil contracts.
Furnace oil is a dark viscous refining by-product used mainly by industries for captive power generation and other heating applications.
With the huge rise in crude prices, the commodity has seen an annualised volatility of up to 40% in the last year and is shrinking the profits of all the manufacturers who use this product.
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NCDEX online trading platform aims to provide a hedging mechanism to tackle this steep price volatility.
The total market size in India for this product is close to 10 million tonnes per annum, according to industry estimates. Imports account for roughly 7-8% of the total Indian requirement.
As per RBI guidelines, domestic consumers of furnace oil are not allowed to hedge the prices in international markets if they are not importing the product. Such players can effectively hedge against furnace oil price movement by using NCDEX futures.
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