NCDEX today launches futures trading

Mumbai, Apr 16: National Commodity and Derivatives Exchange Limited (NCDEX) today announced the launch of trading in futures contract in polymers, with initial trading commencing in three products, Polypropylene (PP), Linear low density polyethylene (LLDPE) and Polyvinyl chloride (PVC).

The NCDEX bid is viewed as a milestone in the widening polymer industry and is expected to enable its hedge against the increasing volatility in plastic prices.

Marking the opening of trade in a press conference at NCDEX headquarters, Mukesh D Ambani, Chairman of Reliance Industries Limited(RIL), the leading domestic suppliers of Polymers, described the launch as 'historical' to ensure a stable pricing system for plastic products.

''While RIL is taking the risk of the new platform, I'm sure that it would bring more efficiency for the industry to fetch the benefits ultimately to customers,'' he said.

Ambani, who predicted the agricultural sector as the major consumer of plastic in the ensuing years, also called for co-operation of all industry majors for the venture.

The futures contract has been destined to mitigate the disturbing concerns in the polymer market raging from price volatility, inconsistent input price correlation and the grave deficiency of a suitable derivative instrument to support risk management, NCDEX sources said.

With the trading and delivery units of the contract fixed at 3 metric tonnes(MT), the delivery and additional delivery centres will be at the NCDEX accredited warehouses at Bhiwandi and Delhi respectively.

The daily price fluctuation limit for the contract has been set at six per cent. While the position limit for members has been set up to 20,000 MT, individual members will be able to trade under the limit of 5000 MTS.

The spot prices of polymer products in the futures contract have been derived through polling, whereby the exchange randomly calls up 20 market participants from a panel of 40.

''Trading on our exchange will yield the participants better prices and an assured risk mitigation normally arises out of price volatility,'' said Managing Director, NCDEX, P H Ravikumar.

According to NCDEX, the country is badly in need of polymers upto 5.6 million metric tonnes per annum(MMTA), where the production capacity stands at 5 MMTA.

The per capita consumption of polymers in the country is at 4.2 kilograms, way behind the global average of 25 kilograms.

UNI