MCX to launch ATF futures contracts in July - airlines, refineries will now be able to hedge

30 Jun 2008

1

Mumbai: Starting July, India's commodities exchange, the Multi Commodity Exchange of India Ltd (MCX) will launch aviation turbine fuel (ATF) futures contracts. This could allow refiners and airlines to hedge their operations, a vital necessity in a volatile market

''We have received permission from the Forward Markets Commission (the commodities market regulator) and will firm up plans shortly to launch ATF futures contracts,'' said MCX managing director Joseph Massey. ''We are in touch with leading airline companies for hedging,'' he added. Oil refining companies and airlines are currently hedging in MCX crude oil contracts, which has a 90 per cent correlation with ATF futures, Massey said.

Rising air traffic, both domestic and international, has seen a steady rise in fuel demand. Airlines have a dire need to hedge on long-term contracts with refineries, for a lack of such a facility forces them to buy at spot rates.

ATF is a specialized type of petroleum-based fuel used to power aircraft. According to industry figures, India produces 78,05,000 tonnes of ATF annually and exports 36,62,000 tonnes.

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