While global indices fall, India's base metal stocks poised for price gains

While global stock market indices have been falling, India’s NSE Metal Index has outperformed the market. The Metals Index has given a positive 3 per cent return in the last month even as the Nifty declined 4.6 per cent. This performance is also somewhat at odds with global commodity trends because India’s domestic demand for steel has kept the price buoyant at a moment when China’s weakness has pushed down international prices.

 

Amid geopolitical confusion over US tariff policy, there could be a great deal of volatility. However, some analysts are fairly optimistic about both non-ferrous and ferrous metals. Apart from US tariff policy uncertainty, China has pushed out several rounds of stimulus, and if these are successful in driving growth, global commodity dynamics could change.

 

Any significant pickup in Chinese activity will have a big positive impact on metal prices. If domestic Chinese demand picks up, the flood of cheap exports will cease, and all industrial metals are likely to see prices firming up. The US tariff scenario is still very fluid. If US President Donald Trump goes ahead with tariffs, it will lead to supply chain disruptions, but price movements would be volatile and unpredictable.

 

Copper prices could rise over FY26 due to US tariffs on Chinese metal, China’s re-imposition of export taxes on copper exports, stable demand generated by investments in renewable power transition, and rising electric vehicle (EV) penetration. However, weak global economic activity may lead to surplus supply. India will remain a net copper importer, but the volume of imports may decline. Hindustan Copper has not done well in the recent past, with share prices down 10.3 per cent in a month. Zinc prices could also moderate, given a high price base in FY25 and the likelihood of higher supply in FY26. Hindustan Zinc is down 2.9 per cent in a month.   

 

Aluminium may be range-bound but on the higher side of FY25 prices due to tight supply and steady demand from renewable energy (RE) transition and EV penetration, as well as from industries such as packaging, construction and electrical appliances. Hindalco’s domestic aluminium business is doing well, and global aluminium prices are holding up, while Novelis may see improvements in margin. Hindalco is up 14.5 per cent in a month, reflecting the positive outlook.

 

In February 2025, domestic iron ore prices remained flat, while international ore prices decreased month-on-month (M-o-M). Aluminium, copper, and zinc all gained M-o-M in February over January. On the domestic front, an anticipated safeguard duty could provide further price support for steel. The proposed US tariff of 25 per cent on steel imports may lead to supply chain disruptions, but lower coking coal prices could help margins.

 

India’s domestic hot rolled coil (HRC) (flat) steel prices fell 15 per cent from June to December but have since improved through January and February and are now at a small premium to imports from China. Safeguard duties could lift prices further. This has potentially positive implications for Tata Steel and Jindal Steel, among others. Steel stocks have done well with Tata Steel up 9 per cent in the last month, Jindal Steel jumped 7 per cent, and JSW Steel gained 3.9 per cent.

 

The steel industry could ride out an adverse global scenario based on the following positive factors. Raw material spreads have stabilised, and imports are dipping and may become more expensive if a safeguard duty is imposed, as is widely expected. Analysts believe that operating profit/tonne has a significant upside from here, with domestic consumption likely to climb as government expenditure on infrastructure recovers through FY26.