MCX plans to launch recycled base metals delivery

MUMBAI: Top commodities bourse Multi-Commodity Exchange (MCX) is planning to allow delivery of locally-recycled base metals against their futures contracts on its platform to help make better price discoveries based on domestic factors. Currently, domestic commodity prices are mostly determined by international cues and domestic factors play very little role in prices. As against this, if local factors are considered the market can better discover prices in a more transparent manner.

According to P S Reddy, the managing director and chief executive of MCX, factoring in domestic factors can help discover prices in a more transparent manner and allowing delivery of locally-recycled base metals is a one effective way to achieve the same and that the bourse is planning to launch the same with recycled lead.

“We are exploring if delivery from locally-recycled lead is possible in the futures contract,” Reddy told on Thursday without offering a timelime for the launch.

When launched, the date for which is not decided, he said, it will promote the launch of Bulldex, which is the first bullion future index contract by MCX, which will go live from August 24.

Reddy said they will involve base metal consumers to test the quality of the recycled-metals and based on the feedback the same will be extended to other base metals as well.

He expects delivery from locally-recycled metals to help ensure a fair price discovery based on domestic factors as against the current practice of getting price signals from global markets. More importantly, such a market based on domestic factors is creating a vibrant spot market, he said.

MCX is also working with lead recyclers to bring down impurities in the metal to enable domestically recycled lead on the exchange platform.

Earlier this week, MCX had said it would launch the country’s first bullion index on August 24, post which the bullion index futures contracts, expiring September, October and November, will be available for trading.

The bullion index called Bulldex is the sixth product in bullion with 1-kg gold, 100-gm goldmini, 8-gm gold guinea and 1-gm gold peta, while the options on futures on 1-kg gold is already in place. The bourse recently also launched options on goods in 100-gm goldmini contract.

Having gold and silver as underlying, the Bulldex will have market lot size of 50 and, unlike gold and silver contracts, it will be a cash-settled futures contract, thus making it attractive for hedgers and institutional participants, who are hesitant in taking delivery of gold and silver, MCX said.