Bangalore : In keeping with its core mission of creating awareness among the market participants about the benefits of hedging, and further contributing to the development of commodity derivatives market in India, Multi Commodity Exchange of India Ltd. (MCX) and Copper Consumers Association of South India (CCASI) jointly organized an awareness programme today in Bangalore (Karnataka). The programme was mainly focused on the ways and means to hedge base metal price exposures using Rupee denominated commodity futures contracts.

Addressing a large gathering of association’s members, Mr. NK Muthappa, AVP- Business Development, MCX, explained in detail about the advantages of an efficient derivatives market alongside communicating the benefits of hedging and price discovery offered by commodity futures market.

While elaborating about the benefits of futures contracts in base metals offered on the Exchange, TG Senthilvelan, Assistant Vice President-Business Development, MCX said that commodity exchanges such as MCX gives the base metal consumers an idea of the price at which the commodity would be available at a future point in time. With proper financial planning they can also cover their purchases.

Exporters, too, can benefit with an advance indication of the price likely to prevail, which can be used to quote a realistic price to secure export contracts in a competitive market.  Entities, using base metals as inputs, can benefit by hedging their risks on MCX, irrespective of whether the commodity traded meets their requirements of exact quality/technical specifications, Mr. Senthilvelan explained.

Mr. Chittaranjan Rege, Vice President-Business Development, MCX said “To counter the risks of heightened volatility across commodities including Copper, in the current environment of global uncertainty, the market participants can hedge copper prices through exchange-traded futures and, thus, even out the cash flows.

“Further, as copper futures at MCX are traded in Indian Rupee, any currency risk associated with trade circuit is mitigated. Notably, to cater to the need of a wide array of market participants, MCX provides copper futures trading in two quantity denomination i.e. 1 tonne contract and 250 kgs contracts”, Mr. Rege stated.

Mr. Sudhakar Hegde ,  President, CCASI said, “With the MSME sector also jumping into the “Make in India “wagon, it is very important that they insulate themselves from the Commodity and currency fluctuations. Only then will they be able to sustain and compete globally.”