Nifty Metal rally: Metal stocks rallied up to 7% on Thursday, March 5 following broader gains on Dalal Street. The benchmark indices Nifty and Sensex jumped over 0.5% each in today’ deals amid value buying and a weaker US dollar. Moreover, rise in Asian peers also added to the gains.
Nifty Metal rose as much as 3.2% in intra-day deals after a 4% fall in the previous session as rising tensions between US and Iran rattled markets as well as a surge in crude oil prices.
Today’s rise of the metal index was led by National Aluminium Company (NALCO), Hindalco Industries, Vedanta, and NMDC, led by a rise in Aluminium prices.
Among metal stocks, NALCO was the top gainers, surging over 7% followed by Hindalco, which advanced over 6.5% and Vedanta, which jumped over 4.5%. Meanwhile, NMDC, Tata Steel, Hind Copper, SAIL, Welspun Corp also gained between 2.5-3.5% each. JSW Steel, Hindustan Zinc, Jindal Steel, APL Apollo Tubes, and Jindal Stainless also advanced over 1% each. However, 2 stocks were trading in the red – Ratnamani Metals and Adani Enterprises, down over 1% each.
Why metal stocks rose today?
Aluminium prices continued to climb on Thursday as supply concerns intensified following disruptions in the Middle East, where ongoing conflict has begun to affect shipments from key producers.
The most-active aluminium contract on the Shanghai Futures Exchange surged 3.55% to 25,365 yuan ($3,683.72) per metric ton by 0215 GMT. On the London Metal Exchange (LME), the benchmark three-month aluminium contract gained 0.81% to $3,369.50 per ton after touching its highest level in nearly four years during the previous session.
The latest price rally was triggered by developments involving Aluminium Bahrain (Alba), one of the world’s largest aluminium smelters. The company declared force majeure on Wednesday, suspending shipments as marine traffic through the Strait of Hormuz slowed dramatically.
Shipping through the vital trade route has been severely disrupted after Iran announced the closure of the strait earlier this week. The move came in response to a joint military strike by the United States and Israel. Tehran warned that vessels attempting to pass through the corridor could face military action.
The Strait of Hormuz is one of the most important shipping routes for commodities from the Middle East, and the disruption has heightened fears of supply shortages across global metals markets.
Concerns about aluminium supply had already been building before Alba’s announcement. Earlier, Norsk Hydro revealed it had initiated a controlled shutdown of its aluminium joint venture in Qatar and also declared force majeure, further tightening supply expectations.
The Gulf region plays a significant role in global aluminium production, accounting for roughly 8% of the world’s supply last year. With two major producers facing operational disruptions, traders are increasingly factoring potential shortages into prices.
Other base metals also edged higher in early trading. Shanghai copper advanced 0.75% to 102,000 yuan per ton, while copper on the London Metal Exchange rose 0.45% to $13,116 per ton. Investors were closely monitoring developments at China’s National People’s Congress for signals on economic policy that could influence industrial metal demand.
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