NCDEX faces traders' ire over default in steel billet delivery

Delivery default in the recently-ended steel billet October contract on the National Commodity & Derivatives Exchange (NCDEX) is turning into a controversy. The exchange has sought two-three days to pacify traders, who are angry over its failure to deliver steel billets within the deadline.

Three clients, trading through Delhi-based broker Nokha Commodities, had sought delivery of 250 tonnes of steel billet by booking under the October contract at NCDEX. Being a compulsory delivery contract, all open positions on the date of settlement (October 20) had to be delivered. “But, 250 tonnes, worth Rs 85 lakh, of our three clients have remained undelivered so far. An exchange official says that he would look into it, but no solution has been offered,” said O P Mundra, proprietor of Nokha Commodities.

The overall quantity of steel billet was transferred into a client’s account on October 24 for the contract which expired on October 20. When the receipt was taken to the Ghaziabad-based India International Steel Centre, the sole delivery centre in north India, the warehouse owner refused to deliver the goods, saying, “You bought goods on NCDEX. Hence, you must get delivery from the exchange itself.”

Mundra is advising his clients to lodge separate complaints against the exchange. “We are looking for the settlement of the issue with either delivery or cash to protect our image. We will give two days more to the exchange for settlement. After that, our clients will lodge FIRs,” said Mundra.

According to him, the exchange does not have nearly 4,000 tonnes of the total deliverable quantity of 5,210 tonnes in its registered warehouses. Hence, other members may join these traders in lodging complaints against the exchange, he added.

The settlement price of steel billet was recorded at Rs 33,000 a tonne, while the spot price is currently ruling Rs 500 higher. Nonetheless, buyers seek immediate delivery of goods, as trucks are parked at the warehouse for loading.

Ananda Kumar, chief, corporate services of NCDEX, said, “The exchange guidelines suggest that such issues should be resolved with three per cent of penalty from the seller, over and above the highest three-day polled price after the expiry date. All such claims have to be settled within 10 days. We will look into the matter and settle the claim, if any, in the next two-three days.”