NSE Signs MoU with SUFI For Development of Steel Commodity Derivatives Market in India

National Stock Exchange of India (NSE) has signed a Memorandum of Understanding (MoU) with Steel Users Federation of India (SUFI) to work on the development of steel and related commodity derivatives in India, as per recent reports. 

The agreement covers product development, industry consultations, awareness programmes and market outreach linked to steel derivatives. The 2 organisations will also work on capacity-building for market participants connected to the steel sector. 

Focus on Price-Risk Management 

The proposed derivatives contracts are to provide a hedging mechanism for companies exposed to fluctuations in steel prices. NSE said the framework is to support more transparent price discovery in the domestic steel market. 

The exchange stated that the initiative may benefit steel manufacturers, processors, MSMEs, infrastructure companies, original equipment manufacturers and industrial consumers operating across the supply chain. 

Commodity derivatives are commonly used by businesses to manage risks related to changes in raw material and commodity prices. 

Steel Demand Across Sectors 

India remains one of the world’s largest producers and consumers of steel. Demand for the commodity is across sectors including automobiles, engineering, infrastructure, capital goods and consumer durables. 

The domestic steel industry has seen steady expansion over the years alongside growth in manufacturing and infrastructure-related activity. Industry participants have increasingly sought formal risk-management tools linked to commodity price movements. 

The agreement also includes cooperation on the development of other relevant commodity derivative products where required. 

NSE Statement 

Sriram Krishnan, Chief Business Development Officer at NSE, said the Indian steel sector has matured over time, increasing the requirement for structured risk-management products. 

He said the collaboration with SUFI is for supporting the development of liquid derivative contracts designed around the needs of domestic steel market participants. 

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Conclusion 

The agreement between NSE and SUFI is for supporting the development of exchange-traded steel derivatives in India. The initiative will focus on improving price-risk management and market participation across the steel sector. 

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