The nifty metal index dipped 6 per cent on Friday. Shares of companies like Tata Steel, Jindal Steel & Power (JSPL), Vedanta, NMDC, and Steel Authority of India (SAIL) dipped between 5 per cent and 8 per cent on the NSE.
Tata Steel shares plunged 8%, the biggest one-day dip in 5 months. Despite the fall, the company’s market price was appreciated by 225 per cent in the past year.
Other companies like SAIL, JSW Steel, Vedanta, and Hindalco Industries increased 106 per cent to 191 per cent in the past year.
As reported by Bloomberg, “This week’s drop for iron ore accelerated, with futures sliding as much as 12 per cent to the lowest since December in Singapore on expectations that Chinese steel output and consumption will weaken over the rest of the year, partly as authorities curb pollution. Prices are more than 40 per cent below the record high level reached just three months ago.”
According to analysts at Edelweiss Securities, an increase in interest rates, taper tantrums in the US, and concerns around inflation pose key macro risks for the metal and mining sector. They also said that the policy uncertainty in China also continues to be a key risk.
“We perceive the uncertainties more as roadblocks than bottlenecks and remain optimistic on China’s long-term goal to reduce its carbon footprint. On the sector front, we see risks to spreads from raw material prices not falling in line with finished products prices owing to supply chain issues, ” the firm said in its August 2021 sector report.
