What It Means
Base metals are the industrial metal futures traded on MCX: primarily copper, zinc, and aluminium, alongside lead and nickel. Unlike gold or crude oil, these contracts exist mainly for industries (cable makers, construction firms, auto manufacturers) to hedge input costs, though retail traders use them to speculate on metal prices too.
How It Works
Standard lot sizes are 2.5 tonnes for copper and 5 tonnes each for zinc and aluminium (smaller Mini contracts exist too, at a fraction of that size). Since the 2019-20 SEBI-mandated shift to deliverable contracts, every base metals contract on MCX settles through compulsory physical delivery if held to expiry, not cash settlement. That's the single biggest difference from gold, crude oil, and natural gas contracts.
Warning
A common mistake is treating base metals the way you'd treat gold or crude oil futures, assuming any open position simply gets cash-settled at expiry. Base metals go to compulsory delivery instead, which means you need an active commodity demat account and the ability to take or give delivery, or you must close the position before expiry.