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New Steel Scrap Futures Contract: What It Means for Your Scrap Rates
NCDEX and BigMint launched a scrap futures contract for HMS 80:20 that helps mills and scrap dealers lock in prices.
A new financial tool has arrived for the Indian steel scrap market that allows businesses to lock in their buying and selling rates in advance. NCDEX and BigMint launched this new contract on 11 November 2026 to help steelmakers, scrap recyclers, and traders manage price risk. If you trade heavy melting scrap, understanding how this benchmark works can help you protect your profit margins.
What is changing
The National Commodity and Derivatives Exchange (NCDEX) launched what is described by NCDEX and BigMint as India's first PRA-based steel scrap futures contract. In this setup, BigMint acts as the Price Reporting Agency (PRA) that tracks and reports daily physical scrap prices, while NCDEX provides the trading infrastructure.
This contract is based on Heavy Melting Scrap (HMS) 80:20, which contains 80% Heavy Melting Scrap Grade 1 and 20% Grade 2. HMS 80:20 is the benchmark grade for this contract. The futures market allows steel mills to lock in raw material costs before buying physical scrap, while traders can protect themselves against sudden price drops.
How the scrap contract works
Trading happens on an electronic exchange with clear rules set for contract size and settlement location. Here are the main specifications of the new contract:
| Contract Specification | Details |
|---|---|
| Benchmark Grade | Heavy Melting Scrap (HMS) 80:20 |
| Trading Unit | 10 metric tonnes (MT) |
| Maximum Order Size | 500 MT |
| Price Tick Size | Rs 10 per MT |
| Basis Centre | Mandi Gobindgarh, Punjab (excluding GST) |
| Settlement Type | Cash-settled |
BigMint data shows that HMS 80:20 prices have a 90% correlation with billet prices and an 89% correlation with wire rod prices. Because these prices move together closely, billet makers, wire rod manufacturers, and scrap dealers can use this single contract to manage their overall price risk.
What it means for your shop
The launch comes as domestic scrap becomes more critical for Indian steel mills. In H1FY'27 (April to September 2026), imported scrap costs exceeded domestic prices by an average of INR 3,600/t, and ferrous scrap imports fell 49% to 2.15 million tonnes in the same six months. Separately, domestic scrap generation grew 22% to 32 million tonnes in 2025-26, a full financial year, so that figure is not directly comparable with the six-month import figure.
As mills rely more on local scrap, prices in key industrial hubs will align more closely with exchange benchmark rates. The basis price is set at Mandi Gobindgarh in Punjab, but the contract is designed to guide pricing in major scrap clusters across Delhi-NCR, Rajasthan, Gujarat, Maharashtra, Chhattisgarh, Odisha, and West Bengal.
What you should do
- Track the daily HMS 80:20 price index from Mandi Gobindgarh to check if local buying rates match exchange trends.
- Ask your regional trade association or broker how to open an exchange account if you handle bulk lots of 10 metric tonnes or more.
- Compare your local scrap purchase rates against finished billet prices before holding large unsold inventory in your warehouse.
- Use the official exchange price index when negotiating long-term scrap supply deals with local steel mills.
Trends to watch
- Rising domestic scrap consumption in Indian secondary steel manufacturing
- Growing price gap between imported ferrous scrap and local scrap rates
- Adoption of exchange benchmarks for hedging metal scrap price risks
Discussion
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