Why are metal stocks melting today?
Shares of major metal stocks were under heavy selling pressure, plunging up to 7 per cent on Friday, as a sharp plunge in iron ore futures across the world spooked investors.
Iron ore extended its rout as BHP Group, a leading mining company, warned it sees an increasing likelihood of “stern cuts” to China’s steel output this year. The prospect of much lower steel production in the second half is testing the bullish resolve of the futures markets, BHP wrote in a commodities outlook report on its website.
This led to iron ore futures to move towards their largest monthly loss on record. The contracts for 62 per cent iron-ore fines delivered to China traded around 30 per cent lower month-to-date.
The Chinese steel industry has pledged to cut outputs by a substantial margin but meeting that goal requires huge second-half curbs to offset booming output earlier in 2021. Production in July was more than 8 per cent lower year-on-year, data on Monday showed.
Nifty Metal was down 4.38 per cent, dragged by 5-7 per cent drop in Vedanta, NMDC, Tata Steel
NSE -8.32 %, JSW Steel and Jindal Steel. SAIL, Hindalco, National Aluminium and Hindustan Zinc were other top losers.
The metal block also dragged benchmark indices Sensex and Nifty. Both indices declined about half a per cent in the afternoon trade.
NEWS CREDIT: ECONOMIC TIMES