The Multi Commodity Exchange of India (MCX), the country’s leading commodity derivatives exchange, today launched its flagship MCX metals report titled “Industrial Strength: Financial Depth – Base Metals Derivatives Serving a ₹20 Trillion Market.” The report was released by Shri Tuhin Kanta Pandey, Chairman of SEBI, and highlights the central role of base metals, viz. aluminum, copper, zinc, lead, and nickel, in driving India’s infrastructure, renewable energy, and manufacturing ambitions. It also underscores how derivatives are strengthening risk management, enhancing price discovery, and expanding investment participation.
Key Highlights:
MCX Base Metals derivatives:
- Provides trustworthy prices to use as references. The Rupee-denominated Base Metals prices discovered on a regulated Exchange are reference prices for market participants for their physical market transactions, substituting international prices of these metals,
- Serves an industrial metals market of about INR 20 trillion (USD 230 billion) in India, which is 6 percent of the country’s GDP,
- Provides a liquid market for hedging. For example, availability of Copper and Zinc derivatives per unit of physical market exposure of a stakeholder is about 2.5 – 3 times,
- Provides an efficient, parallel marketing channel for metals. The exchange’s delivery mechanism facilitated the successful delivery of about 5 lakh tons of metals so far making the Exchange a centre for ‘Delivery of Last Resort’.
- Obviates the need to hedge in international markets by offering Rupee-denominated derivatives contracts in international commodities, thereby:-
. Saving about 1.5 – 2% of the contract value in currency conversion cost and global
clearing fee if hedging is done abroad,
. Potentially saving about USD 1 billion in margins from Mark to Market outflows for
large companies
Today, MCX contracts in copper, aluminium, lead, zinc, and nickel have become the preferred benchmark for industries and investors alike. With innovations such as smaller lot contracts for SMEs, options, and the launch of the MCX METLDEX (base metals index), the exchange has ensured deeper market participation from large corporates to SMEs and retail investors.
Independent studies referenced in the report by IIT Kharagpur and IIM Ahmedabad further validate the efficiency of MCX’s derivatives contracts in improving price discovery, empowering domestic producers, and aligning India’s market standards with global benchmarks.
Mr. Tuhin Kanta Pandey, Chairman, SEBI, shares his views on the report launch: “The MCX’s Metals – From Mines to Markets is more than a theme; it mirrors India’s economic journey. Metals begin as dormant resources deep within the Earth, and through mining, refining, and processing, they become the foundation of progress, fueling industries, building cities, and driving innovation. From the Bronze Age to today’s era of electric vehicles and renewable energy, metals have shaped civilizations. In the 21st century, their journey also extends into finance, evolving into dynamic instruments that power global commodity markets. This dual role as both a physical resource and a financial asset highlights their central place in driving sustainable growth and economic resilience.”
Policy actions to enhance India’s base metals derivatives market include promoting domestic price references, liberalizing financial institution participation (e.g., ETFs, FPIs, banks, insurers, pension funds), reforming GST for exchange-accredited warehouse deliveries, and encouraging government bodies to use domestic exchange-traded prices. As India’s infrastructure, clean energy, and manufacturing sectors grow, the significance of base metals and their financialization via derivatives will increase.
Ms. Praveena Rai, MD & CEO, MCX, said: “MCX is working with the ecosystem to expand participation in metal contracts with all financial and commercial participants. Commercial includes large as well as small- medium metal supply chain producers and consumers. Financial includes broker-members, investors, MFs, ETFs, etc. Banks can play a significant role as lending, corporate and market bankers.”
MCX will remain crucial for price discovery and risk management to support economic growth and stability, especially given the rising demand for metals like copper and aluminium that outpaces secure domestic supply.