Selling pressure on Indian metal stocks increased in Friday’s trading session, December 13, due to the absence of concrete details from an important Chinese economic conference, which left investors disappointed.
SAIL is the biggest loser on the Metal index, experiencing a sharp decline of more than 5.5 percent. Meanwhile, other major stocks in the sector, including Tata Steel, Hindustan Copper, NMDC, and JSW Steel, have all faced notable drops of over 3 percent each, reflecting a broader downturn in the metal sector.
What led to the downfall
On Thursday, China revealed plans to increase its budget deficit, issue additional debt, and ease monetary policy to maintain stable economic growth, anticipating more trade tensions with the U.S. as Donald Trump returns to the White House.
While officials pledged stronger economic support for the upcoming year, the readout from China’s annual meeting did not specify the scale of the proposed stimulus measures, as the country braces for potential new trade conflicts.
China’s Stimulus Uncertainty Hits Base Metal Prices
Uncertainty surrounding the size of China’s stimulus led to a decline in base metal prices during Friday’s trading session. LME aluminium dropped 0.2 percent to $2,595 per ton, zinc fell 0.5 percent to $3,061 per ton, nickel eased 0.2 percent to $16,130 per ton, lead decreased 0.3 percent to $1,999.5 per ton, and tin slid 0.3 percent to $29,46 per ton.
Global Market Uncertainty
The uncertainty in global markets, especially in commodities, has increased due to concerns over potential trade tensions with the US under Donald Trump’s return to the White House. The possibility of higher tariffs on Chinese goods has raised concerns about its impact on base metal prices.
Additionally, the lack of clear stimulus measures from China has further unsettled investors, contributing to a decline in Indian metal stocks. Analysts like Dipan Mehta have advised avoiding metal stocks amidst this volatile economic and geopolitical environment.
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How will China’s stimulus policies impact Indian metal stocks in the long term?
China’s economic policies, especially its stimulus measures, are expected to have a notable long-term effect on Indian metal stocks. Higher demand for metals driven by China’s infrastructure and construction sectors could lift prices, benefiting companies like Tata Steel and JSW Steel.
However, uncertainties persist regarding the sustainability of this recovery, with challenges in China’s property market potentially hindering growth. Moreover, China’s high steel exports could put pressure on Indian producers, requiring protective measures to maintain stable domestic prices.
Future Outlook of Indian Steel Industry
India’s steel industry is positioned for growth despite challenges posed by China’s stimulus measures and U.S. tariffs. With a projected annual demand increase of 8 percent through 2025, driven by infrastructure and construction projects, India is focusing on enhancing domestic production capabilities and reducing import dependency.
Written by – Siddesh S Raskar
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