ICEX to launch iron ore futures: CEO

India Commodity Exchange (ICEX), founded by Indiabulls Financial Services and the state-run MMTC (Minerals and Metals Trading Corporation of India), plans to start iron-ore futures, making it the country’s first bourse to allow trading in the steel-making raw material.

“Going forward, we would add many more contracts that are unique or new to the market,” Chief Executive Officer Sanjay Chandel said in Mumbai yesterday. “Iron-ore is one which we are working on very seriously,” he added.

The India Commodity Exchange, which started operations in November, competes with the Multi Commodity Exchange of India—the nation’s largest such exchange—for a share of the country’s Rs 77.65 lakh crore commodity futures market. India is the third-largest iron-ore producer.

“The planned futures will be used by miners, traders and users—the whole value chain we want to get in,” Chandel said. “We did it primarily because our partner is one of the largest traders and they have a very good connect with the physical market in iron ore in India.”

MMTC is the country’s largest iron-ore supplier, handling about 15 per cent of the nation’s exports of the raw material, according to its website.

BHP Billiton—the world’s largest mining company—and Vale SA, this year broke a 40-year custom of setting iron-ore prices with steel-makers annually by signing quarterly contracts.

According to its website, the India Commodity Exchange wants to add new contracts to the 17 commodities currently on offer. Average daily turnover may advance to at least Rs 4,000-5,000 crore by the year ending March 31, 2011, from about Rs 2,000 now, Chandel said.

“We expect to grow from those contracts rather than running after turnover for the time being,” he said. Trading in iron-ore futures is subject to approval and will begin two months after the Forward Markets Commission (FMC)—the industry regulator—approves the product, Chandel said.