New Delhi: NCDEX Ltd, formerly the National Commodity & Derivatives Exchange, on Wednesday launched what it said is India’s first steel scrap futures contract. The exchange said the contract gives steelmakers, scrap traders and downstream producers a regulated way to hedge raw material price risk.
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The contract is benchmarked to Heavy Melting Scrap (HMS) 80:20, using the price assessment of BigMint Technologies Pvt Ltd (BigMint), a commodity market intelligence firm and price reporting agency (PRA). NCDEX said the product is India’s first PRA-based futures contract in the steel scrap segment. According to the exchange, it meets the need for a credible, market-linked benchmark in a market with diverse scrap grades and fragmented pricing references.
The launch follows a three-year memorandum of understanding (MoU) between NCDEX and BigMint that was announced last week. Under the MoU, BigMint’s daily spot price assessment for steel scrap will serve as the reference price for the final settlement of the exchange’s steel scrap derivatives contracts.
Vikas Goel, Managing Director and Chief Executive Officer of NCDEX, said, “Steel scrap is an increasingly important component of India’s steel value chain, particularly as the industry advances towards more resource-efficient and sustainable manufacturing practices. Yet its price risk has had no exchange-traded answer.”
Goel said the contract follows a data and governance framework that complies with standards set by the International Organisation of Securities Commissions (IOSCO). “By introducing India’s first PRA-based futures contract in steel scrap and bringing in global standard of data and governance following IOSCO compliant framework, NCDEX fills that gap,” he said. “This initiative underlines our continued commitment to market innovation, expanding participation and creating meaningful solutions that contribute to the development of India’s commodity markets.”
HMS 80:20 is made up of 80 percent HMS Grade 1 and 20 percent HMS Grade 2. NCDEX said it is among the most widely referenced scrap grades in international markets and a benchmark import grade across Asian markets.
Under the specifications released by the exchange, the unit of trading is 10 tonnes and the maximum order size is 500 tonnes. The tick size is Rs 10 per tonne. The contract is cash settled, and its basis centre is Mandi Gobindgarh in Punjab. Prices are taken ex-Mandi Gobindgarh, exclusive of Goods and Services Tax (GST).
Kedar Deshpande, Chief Business Officer of NCDEX, said the domestic market needs a common price reference. “Domestic steel scrap market is fragmented with prices varying with region and grade. Our steel scrap futures contract, anchored to BigMint’s established HMS 80:20 price assessment, seeks to address this need by bringing greater transparency to price discovery and providing market participants with an organised avenue to hedge price risk,” he said.
Deshpande said the exchange expects the contract to help steel clusters in eight states and the Delhi National Capital Region (NCR). “We believe this will strengthen the steel clusters of Delhi NCR, Punjab, Rajasthan, Gujarat, Maharashtra, West Bengal, Chhattisgarh, Odisha, and Tamil Nadu by enhancing their ability to manage price volatility and support the evolution of a more structured iron and steel commodities ecosystem in India,” he said.
Citing World Steel Association data, NCDEX said India is the world’s second-largest crude steel producer. India’s output grew by over 10.7 percent year on year to around 168.4 million tonnes in April-March 2025-26. Over the same year, global crude steel production declined by about 2 percent, the exchange said.
Scrap supply has grown with that output. According to NCDEX, domestic scrap generation rose 22 percent year on year to 32 million tonnes, and ferrous scrap imports fell 20 percent as a result. The exchange said this keeps scrap central to the country’s steel value chain. It added that using scrap significantly reduces the carbon footprint of steelmaking compared with the blast furnace-basic oxygen furnace (BF-BOF) route.
NCDEX said billet, wire rod and sponge iron prices move with scrap prices. BigMint data cited by the exchange showed a 90 percent price correlation between HMS 80:20 and billet, and an 89 percent correlation with wire rod. On that basis, the exchange said, a single scrap contract can serve several kinds of users.
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Steelmakers can buy futures to lock in the cost of scrap before they purchase it, the exchange said. Producers further down the chain are exposed to falling prices instead. Billet and wire rod makers and traders can sell futures to offset part of a fall in prices before they sell. Sponge iron producers can use the same contract to hedge against a price decline.
