The shares of aluminium-linked stocks have witnessed a strong rally, surging by over 3 percent in today’s trading session. In this article, let’s explore the reasons behind the rise of aluminium-linked stocks.
Reason for the Rally
Aluminium Prices Surge
Aluminium stocks rose over 3 percent on Friday as London Metals Exchange (LME) aluminium prices crossed $2,850 per tonne. The rise comes from tight global supply, strong demand, and, in addition to this, a smelter outage in Iceland, cutting 100 kilo tonnes of production.
Global Monetary Easing Supports Commodities
The Expectations of easier global monetary policies are boosting commodity prices. Traders expect central banks around the world to lower interest rates or adopt looser monetary policies. This makes borrowing cheaper and increases investment demand, which often drives up commodity prices.
Alcoa Shares Jump
US-based Alcoa Corp jumped 12 percent after its CEO said current aluminium prices and the Midwest Premium (a US delivery cost add-on) are enough to offset tariff impacts, a positive sign for Hindalco and its subsidiary Novelis.
Minimal exposure to tariffs
The US raised tariffs on steel and aluminium from 25 percent to 50 percent starting June 4, but India is only minimally affected, as its exports to the US are small. Most US steel comes from Canada and Brazil, while Canada also supplies about half of its aluminium imports.
The list of Aluminium-linked stocks that are rallying today
Hindalco Industries Ltd
Hindalco Industries Ltd. is a global metals company and the metals flagship of the Aditya Birla Group. It is the world’s largest aluminium company by revenue, a global leader in flat-rolled products through its subsidiary Novelis, and a leading producer of copper and speciality alumina. The company has a fully integrated value chain, from mining bauxite and coal to producing downstream products like rolled products, extrusions, and foils.
With a market capitalization of Rs. 1,83,800.66 Crores on Friday, the shares of Hindalco Industries Ltd jumped by upto 4.3 percent, reaching a high of Rs. 826.80 compared to its previous close of Rs. 792.50.
National Aluminium Company Ltd
National Aluminium Company Limited (NALCO) is a “Navratna” Central Public Sector Enterprise under India’s Ministry of Mines, established in 1981. It is one of Asia’s largest integrated producers of aluminium, with operations in bauxite mining, alumina and aluminium production, and captive power generation. NALCO’s integrated facilities are located in Odisha, with a bauxite mine, alumina refinery, aluminium smelter, and a captive power plant.
With a market capitalization of Rs. 43,555.72 Crores on Friday, the shares of National Aluminium Company Ltd jumped by upto 5.2 percent, reaching a high of Rs. 240.20 compared to its previous close of Rs. 228.25.
Vedanta Ltd
Vedanta Ltd is a diversified natural resource company engaged in the exploration, extraction, and processing of minerals and oil & gas. The company produces and sells zinc, lead, silver, copper, aluminium, iron ore, and oil & gas, and also has significant operations in power generation and steel manufacturing. Headquartered in Mumbai, Vedanta operates globally with strategic assets in India, South Africa, and Namibia.
With a market capitalization of Rs. 1,93,564.21 Crores on Friday, the shares of Vedanta Ltd jumped by upto 3.7 percent, reaching a high of Rs. 501.00 compared to its previous close of Rs. 482.85.
Written by Sridhar J
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