ICEX plans overseas delivery as iron ore futures see demand

By Soumik Dey Feb 03 2011 , New Delhi

Within days of its launch, India’s iron ore futures have garnered interest from overseas buyers and sellers of the mineral. India Commodity Exchange (ICEX), one of the first to launch the future delivery contract, said it now aims to settle even overseas delivery obligations through Indian ports.
“We are probably first exchange in the world to introduce iron ore futures. Within three days of launching contracts in the mineral, we are getting enquiries for delivery from abroad,” Rajnikant Patel, whole-time director of ICEX told Financial Chronicle.
Patel was inducted into the exchange’s board after Reliance Exchange Next bought up India Bulls stake in ICEX. He had earlier officiated as managing director and CEO of Bombay Stock Exchange and facilitated the exchange’s de-mutualisation.

“Our prices quoted for delivery to buyers abroad for the commodity is inclusive of cost, insurance and freight and deliveries could be arranged by us through Indian ports,” he said.
Overseas buyers, sellers and physical dealers with hedging interest showed interest in Indian iron ore futures. "Delivery enquiries were from mining firms in China and Australia while hedging interests were shown by some delivery agents of global steel companies. We are considering these enquiries positively as our prices are the most competitive," said Patel.
Four days from its launch, on ICEX, iron ore futures three-months delivery contracts totalled to 115,600 tonne. Iron ore futures prices after Thursday’s trade stood at Rs 7,946 per tonne after it opened on the exchange at Rs 8,036 per tonne on launch.

Meanwhile, Patel said that Reliance Spot Exchange handles ICEX spot deliveries as part of its move to streamline all operations in the exchange business and cut additional costs.
“ICEX is a one year-old exchange and we aim to focus on exchange’s business more on agricultural produce and minerals,” Patel said. Currently the exchange offers future delivery contracts for trade.
The exchange is also seeking to broad base its product range, membership and conduct introductory courses for commodities trading in the coming months. “We are not seeking growth in terms of volume perspective and would like to extend the scope and horizons of the market first instead,” he said.

On future of commodity exchange business, Patel said, that the space is likely to see some consolidation in the near future as str­onger players remain and the remaining becomes insignificant.
“We see the commodity exchange space constricting to just two or three major ones from six now. This would also be affected because of mergers and acquisitions in coming years,” Patel, also a former banker with the Reserve Bank of India said.(sourced:mydigitalfc.com)