Tata Steel, Hindalco, SAIL, other metal stocks crack as U.S.-China trade war escalates

Shares of metal companies were reeling under selling pressure on Wednesday, in sync with equity benchmarks Sensex and Nifty, as trade war between the world's two largest economies – U.S. and China - reached new terrain after the White House announcement of a sweeping 104% tariff on Chinese goods. The sentiment was dented as the U.S. President Donald Trump’s latest threat of levying additional 50% tariffs on China faded optimism about potential trade negotiations. The wider market meltdown, triggered by Trump’s tariff, has intensified trade war and sparked concerns of a global recession.

The BSE Metal index dropped as much as 2% in early trade today, resuming selling after a day’s pause, amid persistent uncertainties about Trump’s tariff policies which has triggered global trade war and likely to impact economic growth globally. The index is down nearly 24% from its Sept’24 peak, hitting a fresh 52-week low of 25,884 points early this week.

Weighed down by trade war concerns, Tata Steel shares declined as much as 4%, emerging as one of the top losers in the BSE Sensex pack. The shares of Hindalco Industries, SAIL, NMDC, Adani Enterprises also saw selling pressure, falling in the range of 2-4%. Among others, Jindal Stainless, JSW Steel, National Aluminium Company (NALCO), Hindustan Zinc, and Vedanta shares also floated in negative terrain.

Market analysts have suggested investors to avoid globally exposed sectors like IT, pharma, metals and rather focus on domestic economy-linked stocks as they are likely to offer relative stability in the current uncertain environment.

What fuelled sell-off in metal stocks?

In an overnight development, President Trump threatened to impose "additional 50% tariffs" on China, effective from today, which spooked U.S stocks as well as Asian stocks today. The Trump administration has given China 24 hours to "withdraw" the retaliatory 34% tariff it imposed on U.S. goods, failing which Chinese goods would be slapped with 104% import duty.

In response to Trump’s reciprocal tariff, top metals consumer China hit back with additional 34% tariffs on all U.S. goods from April 10. The move followed after U.S President Donald Trump imposed a 34% tariff on most Chinese goods as part of his sweeping reciprocal tariff program.

China's commerce ministry stated it will never accept the "blackmail nature" of the United States following President Trump's threat to impose an additional 50% tariff on China if Beijing does not withdraw its retaliatory tariffs.

According to domestic brokerage YES Securities, Indian metal companies would be navigating a somewhat mixed landscape in Q4 FY25 as Trump tariffs are expected to overshadow the companies’ operational performances.

“Steel producers are benefiting from a seasonal demand uptick, a 12% safeguard duty, and the ease in coking coal prices, which should support an improvement in EBITDA/tone,” it said in a report.

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