NCDEX Steel Scrap Futures: India's First Contract 2026

TL;DR

1. NCDEX has signed an agreement with BigMint Technologies to create a market-linked price benchmark.

2. Heavy Melting Scrap (HMS) 80:20

Introduction

India’s commodity derivatives market one step closer to organised price discovery India’s first steel scrap futures contract based on a Price Reporting Agency (PRA) was launched by the National Commodity & Derivatives Exchange (NCDEX) on November 11, 2026. The new contract is intended to help steel makers, scrap traders and downstream producers manage swings in raw material prices. It is based on the internationally recognised grade of steel scrap, Heavy Melting Scrap (HMS) 80:20.

This development comes as India’s steel production and domestic scrap generation continues to grow. The launch can enhance pricing transparency and open up new avenues of risk management for India’s steel industry. (Source: ET dated November 2026)

What are NCDEX steel scrap futures?

NCDEX steel scrap futures are exchange-traded derivatives that allow market participants to manage steel scrap price risks using a standardised contract linked to the HMS 80:20 benchmark.

Unlike physical scrap transactions, where buyers and sellers negotiate prices based on location, quality and availability, futures contracts use a common reference price. The new contract is cash-settled. Participants receive or pay the difference between the relevant contract prices rather than exchanging physical steel scrap through the futures contract.

This arrangement gives steel manufacturers and traders a way to offset some of the financial impact of price movements.

Key specifications of the NCDEX futures contract

NCDEX has introduced the following specifications for its steel scrap futures contract.

Source: The Economic Times, 11 November 2026.

Why has NCDEX launched steel scrap futures?

Scrap steel is an important raw material for steel production, especially in recycling-based production.

However, the Indian scrap market has been dominated by a large number of regional suppliers, processors and traders.The price depends on the grade of the scrap, its location, cost of transportation and the demand in the market.

That makes it hard for manufacturers to predict future costs of procurement or to hedge against sudden price changes.

The NCDEX steel scrap futures contract has been structured to address three important market needs.

1. Clear price discovery

A common reference for the price of steel scrap can be a standardized benchmark.This could decrease dependence on fragmented regional quotes.

2. Raw Material Cost Management Improvement

Steel makers can hedge the effect of rising scrap prices on future purchases by using futures contracts .

3. Organised risk management

Traders and downstream manufacturers gain access to an exchange-traded instrument instead of relying entirely on bilateral arrangements.

The effectiveness of these benefits will depend on trading participation, liquidity and how closely the benchmark reflects physical market prices.

NCDEX-BigMint Partnership: How will it look?

NCDEX announced a three-year strategic collaboration with BigMint Technologies on 5 November 2026, ahead of the contract launch.

BigMint is a commodity market intelligence and price reporting agency. Under the agreement, the company will provide independent steel scrap price assessments that serve as the reference for futures settlement.

The benchmark uses HMS 80:20 which consists of:

• 80% Heavy Melting Scrap Grade 1

• 20% Heavy Melting Scrap G2

HMS 80:20 is widely quoted in Asian steel scrap markets and serves as a reasonable yardstick for a common price assessment. The arrangement combines NCDEX's exchange infrastructure with BigMint's commodity pricing expertise.

NCDEX has stated that the framework follows the relevant principles of the International Organization of Securities Commissions (IOSCO) for price reporting agencies. This is especially true since futures contracts require a reliable and transparent reference price for the underlying to remain credible.

Source: NCDEX-BigMint tie-up announcement, The Economic Times, 5 November 2026.

India’s rising steel production further bolsters the argument

Steel scrap futures enter the market as India’s steel industry reports strong production growth. According to the Press Information Bureau of the Government of India, crude steel production jumped to 168.4 million tons in FY 2025-26 from 152.2 million tons in FY 2024-25.

This is an increase of around 10.7% year on year.

India's steel industry: Key statistics

Source: NCDEX Announcement Dated 11th Nov 2026

What does the launch mean for the commodity markets in India?

The introduction of steel scrap futures is another risk management tool in the industrial commodity market participants’ toolkit. In the past, steel scrap transactions have often been based on negotiated prices and local market conditions.

1. A standardized reference, in the form of an exchange-traded contract, could make for more consistent price comparisons and better procurement planning.

2. The launch may also encourage broader participation from steel manufacturing clusters in Punjab, Rajasthan, Gujarat, Maharashtra, Chhattisgarh, Odisha and other industrial regions.

3. Another important aspect is the growing role of recycled steel in manufacturing.Steel scrap can be re-used as raw material, reducing the dependence on new extracted resources.Higher scrap-based production can also support lower emission steel making depending on the production process and energy source.

The NCDEX contract does not directly lead to increased recycling.But a more organized scrap pricing market would help commercial planning for companies in recycling and steel making.

What should market participants watch next?

While the launch creates a new opportunity for price risk management, its long-term success will depend on actual market adoption.

Key things to watch for are trade volumes, open interest, market liquidity and the relationship between futures and physical scrap prices. Manufacturers will also need to assess transaction costs, margin requirements and basis risk before using the contract.

A credible benchmark is a good start but sustained participation will decide if the new contract becomes an established part of India’s steel trading ecosystem.

Summary

The launch of India’s first PRA based steel scrap futures contract marks a significant milestone for NCDEX and the domestic steel industry.

NCDEX along with BigMint Technologies, is working toward launching a standardized HMS 80:20 benchmark to solve the long-standing issues of fragmented pricing and limited hedging options.

India’s crude steel production is set to touch 168.4 million tons in FY 2025-26 and with domestic scrap generation on the rise, structured price risk management is picking up steam.

The next test will be if steelmakers, processors and traders will use the contract actively.Steel scrap futures could be a valuable tool in India's evolving commodity derivatives market, provided there is robust participation and credible price discovery.

FAQs

What are NCDEX steel scrap futures?

Steel scrap futures are cash settled commodity derivatives listed on NCDEX. It is to provide participants with a tool to hedge against price volatility in steel scrap.

When did NCDEX first launch steel scrap futures contracts in India?

India’s first PRA based steel scrap futures contract was launched by NCDEX on November 11, 2026.

What is the contract size for steel scrap futures on NCDEX?

The standard trading unit is 10 MT. But the maximum order size is 500 MT.