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MCX will launch a four month contract whereby the much awaited furnace oil futures will go online this week. Crude Oil Futures another exchange traded energy product, is already traded in MCX. After Shanghai commodity exchange ,MCX is possibly be the second exchange to start trading in furnace oil futures. The contract will also be beneficial to many companies who are exposed to crude oil price risks as well as furnace oil as an end product. Oil companies like HPCL and BPCL as well as power generating firms may use the futures contract to hedge their price risks. Others like manufacturing and processing firms can hedge their price risks through contract. The oil has wide applications in production of chemicals, fertiliser, iron and steel,plantation and in shipping industry. A recent RBI notification has allowed Indian companies to hedge their entire physical market exposure in overseas exchanges. With MCX contract going online this week, many are expected to shift their open positions in the local exchange. Many domestic companies have already traded in MCX crude futures. Jignesh Shah MD of MCX says" Like many other commodities MCX took the initiative to go ahead with furnace oil futures after six months of sincere research and brainstorming activities with various market participants." The government has added crude oil along with furnace oil, to the list of tradable commodities in India after MCX requested the market regulator-FMC- to allow them to start trading of these commodities. The ministry of consumer affairs released a notification in this regard a few weeks ago.
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| Posted : 10/18/2005 |
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