NCDEX launches country’s first steel scrap futures contract

India's NCDEX has launched the country's first steel scrap futures contract, providing steelmakers, scrap traders and downstream producers with a regulated mechanism to hedge price risks.

The cash-settled contract is based on the HMS 80:20 scrap grade and uses Mandi Gobindgarh in Punjab as its basis centre. Each contract has a trading unit of 10 tons, while the maximum order size is 500 tons. Contract prices move in minimum increments of INR 10 per ton and are quoted exclusive of GST.

The contract is based on a Price Reporting Agency (PRA) model, with BigMint providing the HMS 80:20 price assessment used as the market reference.

NCDEX said the contract aims to address fragmented pricing and regional differences in India's domestic scrap market by providing a more transparent price discovery and hedging mechanism.

India's domestic scrap generation increased 22 pct YoY to 32 mln tons in the April 2025-March 2026 period, while ferrous scrap imports declined by 20 pct, according to NCDEX.

The exchange said scrap prices are closely linked to other steel products, with HMS 80:20 showing a 90 pct price correlation with billet and an 89 pct correlation with wire rod prices. This could allow the contract to be used as a hedging tool across the steel value chain.