What's behind the 2% decline in Nifty Metal index today?

As per media sources, the US government is likely to increase tariffs on imported steel and aluminium from existing 25% to 50% starting June 4, to support domestic manufacturing of metal in the US.

Nifty Metal index movement today

 

The Nifty Metal index slipped over 1 per cent on the National Stock Exchange (NSE) in Monday’s intra-day trade after reports suggested that the US government is likely to increase tariffs on imported steel and aluminium from existing 25 per cent to 50 per cent starting June 4. The move is aimed at supporting domestic manufacturing of metal in the US.

 

Following the news report, Nifty Metal index was down 1.6 per cent at the day's low of 9,047.95 on the NSE in intra-day trade on Monday. At 09:59 AM; Nifty Metal index recovered partially from its intra-day low, and was down 0.72 per cent at 9,127.10, as compared to 0.66 per cent decline in the Nifty 50.

 

Shares of Hindalco Industries, National Aluminium (Nalco), Vedanta, Lloyds Metals and Energy, Welspun Corp, Steel Authority of India (SAIL), Tata Steel, JSW Steel, Hindustan Copper, Jindal Stainless and Jindal Steel and Power were down in the range of 2 per cent to 2.5 per cent on the NSE in intra-day trade. 

 

US government likely to increase tariffs on imported steel and aluminium

 

On May 30, President Donald Trump announced that he would double the existing 25 per cent tariffs on steel and aluminium imports from June 4. This hike comes under Section 232 of the US Trade Expansion Act of 1962, a law that allows the president to impose tariffs or other trade restrictions if imports are deemed a threat to national security.

 

According to a Bloomberg report, the US President Donald Trump said he would be increasing tariffs on steel and aluminum to 50 per cent from 25 per cent, saying the move would help protect American workers, as he visited a United States Steel Corp. plant on Friday.

 

The new 50 per cent level also offers a backstop for Trump’s promise that the US Steel-Nippon deal, which he opposed on the campaign trail, would benefit steelworkers in the critical battleground state of Pennsylvania, the Bloomberg reported. CLICK HERE FOR FULL REPORT

 

Tariff hike steel, aluminium by US to impact Indian exporters

 

For India, the consequences are direct, the Global Trade Research Initiative (GTRI) said.

 

In 2024-25, India exported $4.56 billion worth of iron, steel, and aluminium products to the US, with key categories, including $587.5 million in iron and steel, $3.1 billion in articles of iron or steel, and $860 million in aluminium and related articles.

 

"These exports are now exposed to sharply higher US tariffs, threatening the profitability of Indian producers and exporters," GTRI founder Ajay Srivastava said.

 

India has already issued a formal notice at the World Trade Organization (WTO) signaling its intention to impose retaliatory tariffs on US goods in response to the earlier steel tariffs, PTI reported. CLICK HERE FOR FULL REPORT

 

Indian Government plans doubling safeguard duty on steel from 12% to 24%

 

Meanwhile, according to a Times of India report, the government is evaluating the possibility of increasing the safeguard duty on steel to as much as 24 per cent, from the current 12 per cent, amid concerns that Chinese goods may enter the market and hurt Indian steelmakers. 

 

ICICI Securities view on metal stocks

 

India is not a large exporter of steel and aluminium to the US and hence its impact on large steel players is expected to be very limited. On the contrary, the Indian government is thinking of increasing the safeguard duty on steel domestically from 12 per cent to 24 per cent, a move which will further support profitability at Indian steel players. “In our view the likelihood of such a duty increase domestically is remote unless imports of steel stage a comeback, which have declined post the finding,” the brokerage firm said in a note.