MCX, ICEX to Start Iron Ore Futures Trade From Jan 29.

Multi Commodity Exchange (MCX), the country's largest by tunover, and Indian Commodity Exchange (ICEX), will start futures trade in iron ore from Saturday, giving an opportunity to traders and exporters to weather near-record prices.

"We expect this contract to start slowly and would hope it to become one of our top ten contracts," Lamon Rutten, managing director and chief executive, MCX, told Reuters on Friday.

The monthly-expiry contract, which will have a trading unit of 100 dry metric tonnes (DMT), will have an initial margin of 8 percent, MCX and ICEX said in a statement.

Delivery unit for the contracts on MCX is 20,000 DMT, while for ICEX, the unit is 5,000 DMT. The ICEX has proposed to use the the spot TSI prices.

Futures contracts would be in addition to the existing forward swap contracts, launched in 2008, being offered by bourses from Singapore to the United States and Europe to prod steelmakers into hedging price risks after the industry moved to a more flexible quarterly pricing system last April after the collapse of a 40-year-old annual benchmark system.

Rutten said he expects to draw wide participation from traders and exporters, who suffer on the margin front due to price fluctuations.

Indian ore with 63.5 percent iron content remained quoted above $190 a tonne, cost and freight delivered to China, on Friday, with offers of as high as $192.

"Once Indian markets open for foreign players, we hope this would become a global reference price," said Rutten.

India is the world's third-biggest iron ore exporter after Australia and Brazil, although its shipments have dropped for a sixth straight month in December because of an export ban in southern Karnataka state.

India normally exports around 100 million tonnes of iron ore annually of which around a quarter comes from Karnataka.

Source : in.reuters.com