Tata Steel, SAIL, Hindalco, Vedanta share prices declined 5-7%: Metal index down 5%. Here’s why

Stock Market today: Tata Steel, Steel Authority of India Ltd , NMDC, Hindalco Industries Ltd , Vedanta , Hindustan Copper Hindustan Zinc Ltd were prominent gainers amongst the metal stocks that led to a decline in the Nifty Metal Index.

The Nifty Metal Index during the intraday trades on Monday, slipped to lows of 8,797.60, marking a decline of 5.5% over the previous close of 9,314.55. The global slow down concerns leading to heightened demand concerns has been one of the key reasons for the decline in the metal stocks.

The recession concerns in the US have increased leading to a steep decline in the global markets. The Benchmark indices Sensex and the Nifty also corrected more than 3% during the intraday trade on Monday.

Steel Authority of India Ltd (SAIL), Tata Steel, Hindalco Industries, Hindustan Zinc Ltd, Hindustan Copper and Vedanta Industries share prices declined 5-7% on Monday during intraday trades.

JSW Steel Ltd, Jindal Steel and Power Ltd, NMDC share prices also saw steep corrections of more than 4%

The cuts however were deeper in the Non Ferrous stocks. The rise in Aluminium, Copper, Zinc prices on the London Metal Exchange has been leading to a rally in Vedanta, Hindalco, Hindustan Zinc, Hindustan Copper share prices. However fears of global recession mean that these base metal prices as that of Aluminium, Copper, Zinc Lead and others can fall significantly and lead to fall in profitability of companies as Vedanta, Hindalco, Hindustan Zinc, Hindustan Copper among others.

Notably the Aluminium, Copper prices though still healthy are already lower from peaks in May. Aluminum prices have corrected by ~18% in the past two months, reversing all gains of 1QFY25, said analysts at Kotak Institutional Equities. Kotak analysts already have trimmed LME aluminum price forecast by 2% to $2,450 a ton and 2,550 a ton in FY2025 and FY26 respectively.

The price volatility as per analysts highlights the fragile fundamentals, as weaker shipment data in 2QCY24 suggests weak demand and rising supply with the ramp-up of idle Aluminium smelters in Yunnan, China, on the back of an improved power situation. The eyes thereby remain on the possibility of rate cuts by the Fed and thereby some pick up in demand from October to December quarter 2024, which can mitigate further downside risk.

The global slowdown concerns are also not positive for Steel companies, nevertheless the global steel prices have already remained under pressure with revival in China demand still remaining awaited. China remains largest consumer of commodities and hence a fall in internal consumption of China means more exports.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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