Gas futures volumes hit a high in 2 mths on MCX

Natural gas futures on the Multi Commodity Exchange (MCX) recorded the second-largest traded volume in the world in just two months, next only to New York Mercantile Exchange (NYMEX) volume.

Launched on July 10 this year, natural gas trades on MCX touched 5,46,150 lots, which is nearly one-fourth of NYMEX volume of 23,23,000 lots.

The number of participants also increased to 514 a day in August from 250 a day in the previous month (July 2006). Daily average turnover of natural gas futures on MCX platform grew substantially, to Rs 436.91 crore, in August from Rs 103.30 crore in July.

"In a scenario where gas supplies are becoming more inclined towards benchmarking domestic prices on the basis of international market, MCX has provided a platform to players in the gas ecosystem to hedge their price risk," Managing Director and CEO Jignesh Shah said.

At a time when market is becoming increasingly aligned to international market and on the prices being worked out on the replacement fuel cost logic, MCX platform has come as an efficient price discovery tool to the small and medium consumers of natural gas.

"Natural gas demand in the country is expected at 166 million standard cubic metres (mmscmd) a day against domestic supply of 98 mmscmd, leaving a huge gap which needs to be filled with large imports at international rates," said Rajesh Wagle, vice-president (commercial), Mahanagar Gas (MGL).

Looking at the liquidity in the market, several distribution companies have started looking at the option of buying natural gas on the Henry Hub or crude oil price basis.