|
New Delhi, Jun 26: The state-owned Hindustan Copper Ltd (HCL) will soon start trading its copper cathodes on the London Metal Exchange (LME), as a part of its strategy on risk management in the form of hedging and price discovery.
This move makes HCL the first Indian copper maker to trade on the LME. Company sources said that LME, afterthe initial scrutiny has approved for the pre-testing of KCC cathode at three European smelters. “The pre-testing stage will take another three to four months and the entire process can take an year,” HCL director marketing RP Singh said adding that this will also help the company meet stringent quality norms.
Now, the copper major is in the process of arranging export of cathodes for the pre-testing. By registering with LME, HCL hopes to be one of the listed producers of copper at the exchange. It will also help HCL to discover the price of copper for months and years ahead. This will help HCL to plan forward as the price of copper move rapidly and sharply. Prices discovered at LME are recognised and relied upon by the industry throughout the world. HCL hopes that hedging and registering with LME would ensure a better price for its products and would bring strategic advantage to the company.
The LME delivery system relies on a user being guaranteed a specified quality and quantity of copper. Copper can only be used to satisfy an outstanding contract, if it is from an authorised brand listed producer and therefore conforms to the specifications outlined for the contract.
The LME is a highly liquid market and in 2007 achieved volumes of 93 million lots, equivalent to $9,500 billion annually and between $35-45 billion of trade on an average every business day. Companies like Birla Copper and Sterlite Industries have been trading at the LME since 2003.
Today, some 94% of all copper futures trading are carried out on the LME. According to analyst, it is this increasing depth and volumes of the LME copper market, which attract HCL. The only vertically integrated multi-unit copper producer in India, HCL is engaged in a wide spectrum of activities ranging from mining, beneficiation, smelting, refining and manufacturing of copper cathodes, continuous cast wire rods and wire bars. However, this is not the first time the company has decided to tap the potential of futures exchange. Last year the HCL board had given its nod to hedging of copper through...
More from Economy
| Single Page Format | 1 - 2 - Next |
Discuss this story on expressindia forums
|
|
 |
 |
 |
About Us | Contact Us | Advertisers | Site Map | Make us your homepage | Work for Us | RSS | Subscribe | Electronic Edition | Privacy Policy© 2009: The Indian Express Limited. All rights reserved throughout the world
