 "Nifty Metal slips 3% intraday; SAIL, NMDC down over 4%, Tata Steel over 2%")
Nifty Metal slipped 2.8 per cent in the morning deals and logged an intraday low at 9,239.1. On the index, all 14 stocks declined. Among others, around 11:18 AM, Steel Authority of India (SAIL), NMDC shares fell over 4 per cent, Tata Steel JSW Steel and Hindustan Copper, Jindal Steel, Hindalco slipped over 2 per cent.
Additionally, Shares of Vedanta, Welspun Corp, National Aluminium Company (Nalco), Hindustan Zinc, APL Apollo Tubes and Jindal Stainless declined over 1 per cent. In comparison, NSE Nifty was trading 0.97 per cent lower at 24,310.10. Gaurang Shah, head investment strategist, Geojit Financial Services believes that as the market sentiments are weak, profit booking is seen in metal stocks along with broad-based selling. He added the metal index had rallied after the China stimulus. In September, China's central bank unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government's growth target.
In 2025 too, as per reports, China signalled further stimulus measures including raising its budget deficit ratio in 2025 at a key economic meeting that sets policy priorities. Top officials led by President Xi Jinping vowed to deliver rate cuts and lower the reserve requirement for banks during a two-day huddle of the Central Economic Work Conference in Beijing, according to reports. However, the meeting did not provide details on when the monetary easing steps will come.
That apart, ICRA believes capacity utilisation of the domestic steel industry in FY2025 is expected to slip below 80 per cent for the first time in four years as cheap imports nibble at market share.
Further, the credit rating agency noted that the fresh upcoming capacity addition plan of 90-95 million tonne per annum (mtpa), entailing investments of $45-50 billion, could be at risk of a slowdown unless earnings of domestic steel mills inch up from prevailing levels. Additionally, two auto industry bodies—Automotive Component Manufacturers Association of India (Acma) and Society of Indian Automobile Manufacturers (Siam)—have requested the Ministry of Steel and the Ministry of Heavy Industries to lift restrictions on certain steel imports, citing concerns over potential disruptions to automobile production in India.
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On the other hand, in international market, aluminium prices surged by 8 per cent sequentially to $2,600 per tonne given market optimism fuelled by Chinese stimulus and production cuts announced by major players on the back of rising alumina prices.
As per JM Financial, major global players like Alcoa / Norsk Hydro have hinted towards healthy demand for aluminum in 2024 with some recovery in the packaging sector in the US and Europe; partially offset by slowdown in automotive demand.
Norsk Hydro also guided for a global surplus of primary aluminium at 0.5mn tons in 2024. On the supply side, global aluminium supply growth might trail demand given limited growth potential in China given capacity cap of 45 million tonnes per annum, limited expansions outside China and lower spreads for aluminium players given higher alumina prices leading to production cuts (Rusal announced a production cut of Rs 2,50,000 tons per year).
Overall, the global aluminium market is expected to end this year with a minor surplus but it might slip into a deficit in 2025.
"We assume LME price to remain rangebound at USD2,500 per tonne – $2,600 per tonne (10 yr average at $2,100 per tonne), near spot levels, in FY25," the brokerage said.