The Bengal Story Bureau: Shares of major Indian aluminium producers plunged up to six per cent on Tuesday as global metal prices fell to a two-month low following the preliminary US-Iran peace agreement. The expected reopening of the Strait of Hormuz has eased concerns over West Asian supply disruptions, prompting investors to dump domestic metal stocks.
State-run National Aluminium Company (NALCO) led the slide, tumbling nearly six per cent to trade at Rs 360 on the Bombay Stock Exchange. Shares of recently listed Vedanta Aluminium Metal hit their five per cent lower circuit at Rs 471.11, while Hindalco Industries dropped more than three per cent.
The broad sell-off dragged the Nifty Metal index down by roughly two per cent in morning trade, diverging from a broader market uptrend.
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Strait of Hormuz Reopening
The sharp correction in domestic equities followed a steep drop in international aluminium prices. Benchmark three-month aluminium contracts on the London Metal Exchange fell by over four per cent to 3,379.50 dollars per metric ton, the lowest level since March.
The slump was triggered by US President Donald Trump’s announcement that a peace deal framework had been reached with Iran, promising to reopen the Strait of Hormuz by Friday. The vital waterway connects the Persian Gulf to the Gulf of Oman.
West Asian aluminium producers typically account for nine to 10 per cent of the global supply. During the war, the closure of the maritime route choked off raw material imports and outbound metal shipments. The prospect of resumed deliveries and the release of Gulf inventories immediately cooled the global market.
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Energy Costs and Profit-Taking
Aluminium smelting is a highly energy-intensive process, and the metal’s price is historically correlated with global crude oil benchmarks. The US-Iran truce sent Brent crude prices tumbling below 84 dollars a barrel in Asian trading. This easing of energy costs has further weighed on the metal’s price outlook.
Market analysts noted that investors also used the geopolitical development as an opportunity for profit-booking after a recent rally in metal stocks. The combination of resumed West Asian supplies and falling crude prices may continue to pressure Indian aluminium producers in the near term.
