Metal and coal stocks in India edge up on China’s capacity cut news

Indian metal and coal stocks were up on March 2 after the news of China imposing cuts on steel, aluminium and coal production started circulating in the market. A drop in supply of these highly demanded commodities are expected to hike prices and improve valuations of companies in countries which are in competition with China.

The BSE metal index was up 1.5% to hit 12,306.54 in intraday trade in a firm Mumbai market.

National Aluminium (Nalco) stocks jumped as much as 7% while Vedanta gained 3%, Hindalco and Coal India gained 1% respectively.

As reported by Reuter, on Thursday, China has ordered steel and aluminium producers in 28 cities to slash output during winter, indicated plans to cut coal use in the capital and required coal transport by rail in the north to fight increasing smog and pollutions. The decision to cut metal production came up just before the Chinese government’s annual parliamentary session on Sunday, which would consider pollution as a significant issue.

China has been influencing global metal prices through its massive metal production and cheap export in the global markets. India has imposed safeguard and anti-dumping duties to protect domestic firms, many of whom have suffered huge losses.

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It is reported that Chinese companies have also been directed to cut 30% aluminium capacity and 50% alumina production across the 28 cities. According to Reuters calculations, based on the cuts over three months, the measures would bring down China’s total annual aluminium output by 17%.