The Hindu Business Line : MetalJunction plans coal futures auction

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MetalJunction plans coal futures auction

Pratim Ranjan Bose

May collaborate with national, global commodities exchanges

On the anvil
"We have had initial discussions with CIL, the Union Coal Ministry and other related parties on the issue. We are yet to finalise the mechanism."
MetalJunction is planning to launch two new e - auction platforms.

Kolkata , March 22

MetalJunction Services Ltd (MJSL) is actively considering launching of forward-cum-futures auction in coal.

In collaboration with Coal India Ltd (CIL), MJSL has already launched spot electronic auction platform on coal, named as Coal Junction.

MJSL is a 50:50 joint venture between Tata Steel and Steel Authority of India.

The platform, trading primarily in coking and thermal coal, has resulted in a substantial increase in realisation per tonne of coal.

According to sources, CIL has indicated a doubling of the volume using the platform from 20 million tonnes to somewhere between 36 and 40 million tonnes in 2006-07.

MJSL sources said that once the spot market is stabilised, the company will consider meeting the long-term needs of the industry (primarily middle and small segment).

"We have had initial discussions with CIL, the Union Coal Ministry and other related parties on the issue.

We are yet to finalise the mechanism," an MJSL official said, adding that price volatility in coal had increased substantially in the last few years, paving the way for launch of forward contracts.

"However, we are not interested in setting up a simple futures trading platform as it is generally crowded by investors or speculators who prefer cash settlement. We want serious participants who are interested in both hedging their input price risks and firming up long-term supplies through the proposed system.

Accordingly, the platform will be a hybrid of forward and futures trading platforms," he said.

According to sources, MJSL may collaborate with a national or international commodities exchange for the proposed forward auction.

Two new platforms

Having registered fast growth in last two years, MetalJunction is planning to launch two new e - auction platforms on FMCG and industrial products latest by May, 2006.

MSJL expected to clock over Rs 7,000 crore turnover in the current fiscal, up by 80 per cent from Rs 4,200 crore in 2004-05.

The company recorded a turnover of Rs 2,135 in 2003-04.

MSJL sources said that 40 per cent of the revenues this year are contributed by trading of steel.

Coal Junction contributed roughly 20 to 25 per cent of the turnover and the rest came from Process Junction, a platform for industrial procurement.

While the profit figures are not disclosed the sources said that profits before tax for the current fiscal is expected to register 60 per cent growth.

To clock Rs 7,000-cr turnover

Having registered fast growth in the last two years, MetalJunction is planning to launch two new e-auction platforms on FMCG and industrial products by May.

MJSL expects to clock over Rs 7,000-crore turnover in the current fiscal, up by 80 per cent from Rs 4,200 crore in 2004-05. The company recorded a turnover of Rs 2,135 crore in 2003-04.

MJSL sources said that 40 per cent of the revenues this year are contributed by trading of steel.

Coal Junction contributed roughly 20 to 25 per cent of the turnover and the rest came from Process Junction, a platform for industrial procurement.

While the profit figures are not disclosed, the sources said that profit before tax for the current fiscal is expected to register 60 per cent growth.

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