Aluminium prices extended gains on Thursday as supply concerns mounted after Aluminium Bahrain (Alba) halted shipments. Alba, which operates one of the world’s biggest aluminium smelters, declared a force majeure yesterday, stopping shipments due to the closure of the Strait of Hormuz. Iran has closed the key corridor amid its war with Israel and the US, promising to attack any ship that tries to cross the strait.
Aluminium contracts with March expiry on the Multi-Commodity Exchange of India (MCX) gained nearly 1% to trade at Rs 332.50 per kg. The contracts with April and May expiries also gained around 1%. The benchmark three-month aluminium on the London Metal Exchange rose 0.81% to $3,369.50 a ton, after touching a near four-year high on Wednesday.
Additionally, China on Thursday said it will reduce its production capacity of steel, oil refining and other industries. According to an annual report from the country’s state planner National Development and Reform Commission (NDRC), it will also manage capacity in copper smelting, alumina and coal chemical industries.
China set a lower growth target of 4.5% to 5% for this year. Slowing growth in China may possibly affect its metal companies, which will likely give a competitive edge to Indian metal companies.
The rise in metal stocks was also driven by a weaker dollar and value-buying.
Metal index snaps three-day losing streak
The sharp rise in metal stocks pushed the Nifty Metal index up nearly 4% to hit a high of 12,201, tracking the sharp rise in overall markets. The index rebounded after a three-session losing streak, during which it had tumbled more than 5%.
The index later pared some gains and was up 2%, as seen at 12:40 pm. Hindalco Industries shares were the top gainer on the index, rising around 5.5% to trade at Rs 983.50 apiece. Earlier during the day, the stock gained nearly 7%. National Aluminium Company (NALCO) shares were also up 5%.
Welspun Corp and Vedanta shares rose 3% and 2% respectively, while NMDC, Hindustan Copper, Tata Steel, and JSW Steel shares gained up to 2%. APL Apollo Tubes, Jindal Stainless Steel, SAIL and Hindustan Zinc shares were trading in the green with marginal gains.
(With inputs from agencies)
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