Metals Rally Up to 3% After Two-Day Slump

What’s Driving the Surge Amid Trump’s Tariff Threat?

Indian Metal Stocks Shine as Dollar Weakens, Trade Tensions Escalate

Metal stocks in India surged on March 17, reversing a two-day losing streak, as a weakening US dollar and expectations of safeguard duties on steel imports fueled investor sentiment. The Nifty Metal Index gained nearly 1%, with stocks of major metal producers rising up to 3%.

Top Gainers in the Metal Sector

Among the biggest gainers, APL Apollo Tubes led the rally, rising nearly 3% to ₹1,414 per share. This marks a strong recovery from its 52-week low of ₹1,273 per share on February 17. However, the stock remains significantly below its 52-week high of ₹1,729 per share.

Other major gainers included:

• Hindustan Zinc
• NMDC
• Jindal Stainless Steel
• Adani Enterprises (gained nearly 2%)

Jindal Steel also saw over a 1% increase, trading at ₹900 per share.

Additionally, shares of Steel Authority of India (SAIL), Vedanta Limited, Tata Steel, JSW Steel, Hindalco, and Ratnamani Metals & Tubes were trading in the green with marginal gains.

Adani Enterprises and Tata Steel Drive Market Sentiment

The rise in Adani Enterprises and Tata Steel contributed significantly to the Nifty Metal Index’s upward movement, signaling renewed investor confidence in the sector.

Drivers Behind the Metal Rally

1. Weakening US Dollar Boosts Metal Stocks

One of the primary reasons for the rally was the weakening of the US dollar.

• The USD Index hovered near a five-month low against major global currencies.
• The Indian Rupee strengthened to a three-week high of ₹86.91 per USD.

A weaker dollar typically benefits Indian metal exporters, making their products more competitive in global markets.

2. President Trump’s Tariff Threats and Their Impact

Investor sentiment was also influenced by the looming threat of reciprocal tariffs from the US under former President Donald Trump.

• Last week, Trump imposed a 25% tariff on all steel and aluminum imports.
• He initially threatened to double tariffs on Canadian imports but later backed down after Canada withdrew some retaliatory measures.

These trade policies are expected to benefit Indian metal producers, as US protectionist policies may reduce competition from global steel manufacturers, especially from China.

3. Potential Safeguard Duties on Cheap Chinese Steel Imports

India’s domestic steel industry is anticipating government action against cheap steel imports from China.

• Tata Steel CEO T.V. Narendran recently mentioned that safeguard duties on steel imports could be announced soon.
• If implemented, these duties could protect domestic steelmakers from an influx of lower-priced imports, driving up demand for Indian steel producers like Tata Steel, JSW Steel, and SAIL.

4. Limited Impact of US Tariffs on Indian Steel Giants

According to a report by Moody’s, the recently imposed US steel tariffs will have minimal direct impact on major Indian steel companies.

• Companies such as Tata Steel, JSW Steel, and PTT Global Chemical generate most of their earnings from Asia.
• These firms have little to no exports to the US, making them less vulnerable to the direct effects of the tariffs.

5. China’s Expected Stimulus Measures

Market participants are also optimistic about China’s potential economic stimulus, which could boost global metal demand.

• As trade tensions with the US escalate, China is expected to introduce new economic stimulus measures to support domestic consumption.
• This could lead to higher demand for metals, benefiting Indian companies that supply raw materials to Chinese industries.

Indian Metal Sector?

With the combination of:
✔ A weaker dollar improving Indian exporters’ competitiveness
✔ Trump’s tariff policies potentially reducing global steel supply
✔ Safeguard duties expected to protect domestic producers
✔ China’s economic stimulus likely boosting global demand

The Indian metal industry could witness further upward momentum in the coming weeks. However, investors will closely watch government policies and global trade developments to assess long-term growth prospects.