MCX to launch ATF future contracts to help refiners, airlines

Mumbai, Jun 29 (PTI) The Multi Commodity Exchange
is all set to launch Aviation Turbine Fuel (ATF) futures
contracts early next month, which is expected to help refiners
and airlines facing trouble in a turbulent oil market, a top
company official said.
"We have received permission from the Forward Markets
Commission (FMC) and will firm up plans shortly to launch ATF
futures contracts. We are in touch with leading airline
companies for hedging," MCX Managing Director, Joseph Massey,
told PTI here.
Oil refining companies and airlines are presently
hedging in MCX crude oil contracts, which has a 90 per cent
co-relation with ATF futures, Massey said.
A relentless rise in global crude oil prices combined
with uncertainty surrounding its supply, has pushed
air-carriers into a tricky situation.
The Indian aviation sector, especially airlines,
suffers from a sure and steady supply of fuels. MCX has
spotted this need and decided to launch ATF futures that are
expected to benefit both oil refining companies and airlines,
company officials said.
The country is seeing a major spurt in air traffic,
both domestic and international. As a result, there has been a
steady rise in fuel demand and refiners need an assured supply
to cater to the growing demand. Airline companies are also
looking at hedging on long-term contracts with refineries.
Today, in the absence of such futures contracts,
aviation companies are forced to buy in the spot markets that
often may not turn out to be a commercial proposition.