NCDEX Launches First PRA-Based Steel Scrap Futures Contract

The National Commodity and Derivatives Exchange (NCDEX) has launched futures trading in steel scrap, marking the introduction of the first-ever Price Reporting Agency (PRA)-based futures contract in this segment.

The contract aims to address the need for a credible market-linked benchmark and an organized hedging mechanism in a market that is typically characterized by diverse scrap grades and fragmented pricing references. The underlying contract uses HMS 80:20, an internationally recognized grade comprising 80 percent Heavy Melting Scrap Grade 1 and 20 percent Heavy Melting Scrap Grade 2. This is among the most widely referenced scrap grades globally and serves as a benchmark import grade across Asian markets.

The launch follows a recent Memorandum of Understanding (MoU) signed between NCDEX and BigMint Technologies, a commodity market intelligence and price reporting agency. Under the arrangement, BigMint will act as the price reference agency.

The cash-settled contract features a trading unit of 10 tonnes with a maximum order size of 500 tonnes. The tick size is set at ₹10 per tonne, with the basis center established at ex-mandi Gobindgarh, Punjab.

Vikas Goel, Managing Director and CEO of NCDEX, stated that the introduction of the PRA-based futures contract underlines the exchange’s commitment to market innovation, expanding participation, and creating solutions that contribute to the development of commodity markets.

Data indicates that domestic scrap generation has increased by 22 percent year-on-year to 32 million tonnes, accompanied by a 20 percent decline in ferrous scrap imports, keeping the segment central to the country's steel value chain.

Kedar Deshpande, Chief Business Officer at NCDEX, noted that the domestic steel scrap market remains fragmented, with prices varying across regions and grades. The new futures contract is designed to address this by bringing greater transparency to price discovery and providing participants with an organized avenue to manage price risk.

"The introduction of a Price Reporting Agency-based futures contract for steel scrap is a significant step toward bringing structural transparency to a fragmented sector. As domestic scrap generation grows and import dynamics shift, having a reliable, market-linked hedging mechanism is essential for industry participants. This initiative by NCDEX provides businesses in the steel value chain with a structured tool for price discovery and risk management, which will ultimately support more efficient market operations." — Dr. Shishir Gupta, Founder & CEO, StartupLanes