MCX launches world’s first brass futures contracts
India’s largest commodities exchange platform, Multi Commodity Exchange of India Limited (MCX) launched world’s first brass futures contracts. It will facilitate brass stakeholders to hedge their price risk.
MCX Brass futures will be the first non-ferrous contract with compulsory delivery option. Its price will be quoted as per rate at ex-warehouse Jamnagar (delivery centre) inclusive of taxes and duties.
Significance of MCX Brass futures
It will provide its stakeholders with more organised and robust price discovery platform. It will also help them to use national level benchmark price as ready reference. It will enable them to mitigate their price risk. It will lead to best price discovery for brass, which is of key relevance to its stakeholders including importers, exporters, manufacturers, refiners, and processors among others in country, who are looking to hedge their price exposure.
Brass is metallic alloy of copper (55-60%) and zinc (40-45%) with small amounts of lead and iron. It is used in industries like electrical appliance, pump parts, marine engines, switch gears, sanitary ware, automobiles and defence.
The estimated annual production of brass in India is approximately between 100,000-150,000 tonne, which includes production through primary metal and recycled brass. India is largest exporter of finished brass products. India imports huge quantities of brass scrap from US, Middle East, Africa and Europe which is then separated and recycled to make brass.
Out of the 5,000 small and medium units (SMEs) producing brass in the country, about 3,000 are located at Jamnagar, Gujarat which accounts for 80% of brass produced in India. The rest of the companies are spread across Moradabad (Uttar Pradesh) and Jagadhari (Haryana).
Multi Commodity Exchange (MCX)
MCX is country’s first listed commodity futures exchange that facilitates online trading, and clearing and settlement of commodity futures transactions, thereby providing platform for risk management. It was launched in November 2003 and operates within regulatory framework of Forward Contracts Regulation Act, 1952 (FCRA, 1952) under SEBI.
MCX offers futures trading in bullion, ferrous and non-ferrous metals, energy, and a number of agricultural commodities (mentha oil, cardamom, potatoes, palm oil and others). Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil and gold in futures trading.