US Tariffs Will Hit the Stocks of Indian Metal

June 2, 2018

Analysts expect that there would be short-term pressure on metal stocks because of the uncertainty around material flow and retaliatory measures by the affected regions. US has decided to soon impose a tariff of 25 per cent on steel and 10 per cent on aluminium imports from Canada, Mexico and the EU. It will also revoke the temporary exemption. It is expected that this will impact metal stocks like JSW Steel, JSPL, Tata Steel, Hindalco.

On the other hand, the stock market of China has plunge, thus it resulted in crash of global metal prices that has worsened the revenue outlook for metal producers of India. This is due to the raising repayment concerns that took place in an already debt-laden sector. The experts have commented on this matter and said that the China accounts for more than 30% of the overall consumption of metals globally. The prices have further collapsed after witnessing significant correction in prices in the last few months. This will have impact in the Indian Metal Sector as well. This collapse means the landed price for these metals in the domestic market will go down further, thus pressuring them to reduce prices. As China will dump its surplus production in various markets, the export demand may also fall.

When China was building up its infrastructure ahead of the 2008 Olympics, most of the Indian steel and base metal manufacturers invested heavily on expanding capacity. However, the manufacturers struggled to produce enough revenue to retire debts after the global economic meltdown the following year. It would be not wrong to say that the same country that took prices to their crest with its feverish imports and spending has been involved in bringing them down, with a large cut expected in its desire for metals as well as for other commodities that may hurt Indian manufacturers somewhere or the other.

 

About nehanchal

I am Nehanchal. 3 years ago, I started my career as content writer at Money classic Research. I am fascinated with this job and I feel habit of reading and writing enhances your skills. I love to write technical and health blogs. However, I am engineer turned writer and pursued graduation at Rajiv Gandhi Prodyogiki Vishwavidhyalaya.
By: nehanchal

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