Metal stocks surge as US-China trade deal eases economic concerns

Synopsis

The Nifty Metal index jumped 5.9% - its best single-day performance in three years. Hindustan Copper soared 10%, emerging as the top gainer of the day. Steel Authority of India Limited (SAIL), National Aluminium Company (Nalco), Tata Steel and JSW Steel, which gained 5-8% each.

Mumbai: Shares of metal companies were among the top gainers in a relief rally on Monday after the US-China trade deal eased investor concerns of a global economic slowdown, which was feared to hit demand for these commodities.

The Nifty Metal index jumped 5.9% - its best single-day performance in three years. Hindustan Copper soared 10%, emerging as the top gainer of the day. Steel Authority of India Limited (SAIL), National Aluminium Company (Nalco), Tata Steel and JSW Steel, which gained 5-8% each.

The US and China on Monday agreed to reduce the steep tariffs they had imposed on each other. As per the agreement, the US will lower its overall tariffs on Chinese goods from 145% to 30%, while China will cut US tariffs from 125% to 10%.

"We believe commodity prices are poised to strengthen from here, benefiting metal companies across the board," said Arijit Malakar, equity research analyst at Ashika Stock Broking.

Investors had cut exposure to metal stocks after the announcement of Donald Trump's tariffs in April was feared to trigger a global economic slowdown, which would lower global demand for metals.

Agencies

Additionally, it was anticipated that the oversupply from China would be dumped in India, crashing domestic prices. “Previous concerns about China dumping metal into India and a potential crash in metal prices have eased following progress on the US-China trade deal, which makes such dumping actions less likely,” said Malakar.

The Nifty Metal index is down 1.8% since April 2 against Nifty’s gains of 6.8%. “With a US-China deal likely, concerns about economic slowdowns in both countries have eased. This development could help correct the global supply-demand imbalance, creating a supportive environment for growth in metal prices,” said Pankaj Pandey, head of retail research at ICICI Direct.

Malakar prefers domestic-focused players such as Jindal Steel and Power, SAIL and Nalco. Divyam Mour, research analyst at Samco Securities said the outlook for the metal industry is promising in 2025.

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