India's largest agri commodity bourse - the National Commodities and Derivatives Exchange - plans to launch futures trading in coal soon.
NCDEX officials said a formal proposal to this effect will be submitted to the apex commodity markets regulator--Forward Markets Commission.
Futures trading in coal futures is expected to play an active role in lowering the price risks for both consumers and manufacturers using coal as well as managing resources.
NCDEX energy products AVP Arvind Pal Singh said that the exchange will launch delivery-backed futures for domestic as well as imported coal.
He said the coal futures contracts would be traded in the exchange so that manufacturers can hedge risks arising out of the price volatility.
The exchange would launch the coking coal contracts first. As far as thermal coal is concerned, any change in price would not affect the power generating companies as the costs would be passed on to the buyer.
India imports nearly 22 million tonnes coal every year. The total requirement of the commodity in India is around 25 million tonne.
India, one of the top five importers of coking coal, mainly imports from Australia, China and Indonesia.
Coal industry leaders said futures trading in coal can offer an option to reduce price risks and understand demand-supply situation.
Association of Secondary Steel Manufacturers president J K Arora said the industry hopes that futures trading would make the direction of coal prices easier to predict.
