Davis Index ferrous scrap futures contracts on Mettalex first to decentralize global trading
Commodity price reporting agency, Davis Index, will launch the word's first decentralized futures contracts for recycled steel this month. These contracts will be listed on Mettalex, a decentralized exchange for commodities trading.
The exchange-settled daily contracts for bulk exports of recycled steel (ferrous scrap) shipped to Turkey, and for containerized shredded scrap shipped to India, will launch on Mettalex on May 31.
The Turkish contract will settle on a basis of Davis Index U.S.-origin HMS 1/2 (80:20) bulk cfr (cost and freight) Turkey Index. The Indian contract will settle on a basis of Davis Index containerized shredded cfr Nhava Sheva Index.
Turkey is the world's largest importer of ferrous scrap shipping in bulk vessels, sourcing most of its supply from Canada, Europe, Russia, UK, Ukraine and the USA. The Indian subcontinent is the world's largest importer of containerized ferrous scrap, sourcing its supply from almost every region of the world.
"The ability to hedge the numerous recyclables' grades and specialty finished products that make for most of the infrastructure around us has long been a need in our industry," said Sean Davidson, CEO of Davis Index. "The current system provides the industry with less than a handful of instruments and the basis risk and costs are just unworkable for most companies. Mettalex is finally answering the call for a decentralized exchange that can list any commodity.
"We look forward to providing our price benchmarks on the Mettalex platform to give the manufacturing, demolition and metal producing sectors the precise hedging instruments they need."
According to Davis Index, today's hedging tools remain largely inaccessible by small and medium-sized enterprises due to high costs. Additionally, commodity market participants face obstacles related to front running, poor liquidity, price manipulation, and loss of value in the form of margin calls.
Mettalex solves these problems by allowing physical asset holders a cost, capital, and risk-efficient access to commodities markets, enabled by DeFi (decentralized finance) liquidity, and automated by blockchain-based smart contracts.
"A critical byproduct of the Metttalex platform is the transparency it will bring to the pricing data around the world's most valuable commodities," explains Mettalex CEO, Humayun Sheikh. "By making this type of market intelligence and the ability to trade more readily accessible, Mettalex aims to bring one of the oldest forms of trade in human history into the present century. With Mettalex we aim to align the incentives of traders, stablecoin liquidity providers and physical commodity holders, to create a one-of-a-kind tool that is accessible to anyone on this planet 24/7/365."
Mettalex launched its blockchain-agnostic exchange which is available on Ethereum and Binance Smart Chain as of February, 2021. The exchange incorporates Fetch.ai technology and enables traders to take leveraged long or short positions against many commodities, including Steel Recyclables, Zinc and Iron Ore, and spreads for digital currency. All of these are unique markets in the DeFi space.
Davis Index is a tech-led proprietary market price data provider for the global manufacturing supply chain. The company carries six price reporting platforms in its portfolio which include the world's only market intelligence platform built solely for the manufacturing chain.
