Price difference in commodities - MCX & International markets

The price difference in MCX & international market commodity rates depends on how MCX calculates the Indian Rupee price from the foreign contracts used as reference. Check out the below note that has been shared by the MCX team for calculating the price of energy, gold & other metal contracts.

Energy

MCX Crude oil contract: The due date rate is the settlement price, in Indian rupees, of the New York Mercantile Exchange’s (NYMEX) Crude Oil (CL) front-month contract on the last trading day of the MCX Crude Oil contract.

MCX Natural gas contract: The due date rate is the settlement price, in Indian rupees, of the New York Mercantile Exchange’s (NYMEX) Natural Gas (NG) front-month contract on the last trading day of the MCX Natural Gas contract.

The last available RBI USDINR reference rate is used for the currency rate conversion in the above cases.

Gold

Here’s an illustration of the components for the landed cost of Gold for import to India:

Sequence Particulars
A Bullion Spot Price (US$/Troy ounce)
B CIF in dollars
C = A + B Total
D 32.1507 (It is a conversion factor from troy ounce to kg)
E = C * D Dollars per kg
F = E * 995/1000 995 prices
G Currency Rate
H = F * G ASSESSABLE VALUE
I Basic Custom Duty (7.5%) + Social Welfare Surcharge is 10% on BCD + Agri Infra & Development Cess (AIDC: 2.5%) = Total (10.75%)
J = H + I Landed Cost per kg
K Bank Cost(0.10%)
L = J + K Final wholesale Price per kg
M = L * 10/1000 Final Price per 10 gms

Note: Duty tariff and USD/INR is published every fortnightly on the CBIC website for import duty calculation. The everyday polled spot price displayed on the TWS / Website.

Other Metals

Below is the illustration of the components of the screen price for all Metals trade on MCX (Al / Cu / Pb / Ni / Zn).

Sequence Particulars
A Metal cash price (US$ / MT)
B Premium (US$ / MT) (estimated)
C USD / INR
D = A + B * C CIF Price (INR / Kg)
E Basic Customs Duty + Surcharge (%) [BCD + Social Welfare Surcharge (SWS) @ 10% of BCD]
F = D * E Customs Duty Value
G = D + F LANDED COST (INR / Kg)
H Customs clearing cost / Transportation / Handling etc. (Approx.)
I=H*G Clearing & Transportation Costs (INR / Kg)
J = G + I FINAL DELIVERED PRICE (INR/Kg)

You can also check out this post from 2015 where @nithin has explained how MCX calculates the price of Gold and Silver.

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