MUMBAI (Scrap Register): Multi Commodity Exchange of India Ltd. (MCX) has launched India’s first options contract on copper futures.
At 5:00 pm on Monday, the contract has clocked a traded volume of 461 lots with value of Rs. 21.89 crore.
Currently, June, August and November 2018 option contracts are available for trading, with one MCXcopper futures contract (1 MT) as the underlying. The exercised positions of the options contract postexpiry shall devolve into the respective underlying future positions.
This new options contract providesthe optimal tool to hedge and mitigate price risk in copper for the stakeholders. MCX copper optionsare available to trade from 10:00am-11:30pm/11:55pm on weekdays.
In order to encourage active participation in the market the exchange is not levying any transactionfees on all the commodity options contracts till September 30, 2018.
“This promising start of ourcopper options trading by virtue of its design value adds to the underlying futures and gives copperindustry a greater flexibility with alternative opportunities to take on price risk. We expect that thisnew tool will gain overtime from industry confidence and support as a highly attractive hedginginstrument to keep risks of price uncertainty under their control,” said Mrugank Paranjape, MD & CEO, MCX.
“Copper options launched by MCX is a welcome moveas this would help the corporatesto do a better budgeting exercise as the premiums would be known. This will help us to procurematerial at prices that we have envisagedspecially in situations like tender or open orders. The optionscontractswill complement the current futures contracts on the Exchange extremely well,” said Devendra Surana, Chairman, Telangana State Council of FICCI; and MD,Bhagyanagar IndiaLimited.
Copper ranks as the third-most-consumed industrial metal in the world, after iron and aluminium. Theworld’s refined copper usage has surged in the last few years, owing to the growing demand in sectorslike electrical and electronic products, building construction, industrial machinery and equipment,transportation equipment, and consumer and general products.
Copper ore production in India stood at 3,846 thousand tonnes in 2016-17. India's consumption demand for refined copper stood at 820 thousand tons in the FY16.