Solution:

In the given scenario, X Inc enters into a forward contract to purchase 10 tons of steel at an agreed price, with the intention of using it in its operations. The contract is settled gross by taking delivery of the steel after 3 months.

A derivative is a financial instrument that derives its value from an underlying asset, index, or reference rate. It also meets certain other criteria, such as being settled in cash or another financial instrument.

In this case, the contract is a forward contract, which is a type of derivative. It is settled by delivery of the underlying asset, which is steel in this case. Therefore, the forward buying contract entered into by X Inc is a derivative contract to be classified as a financial instrument.

It is important to note that even though the contract is intended to be used for operational purposes, it still meets the definition of a derivative and must be accounted for accordingly.