The Indian benchmark indices continued to trade weak on Monday afternoon with the Sensex plunging 281 points or 0.83 percent while the Nifty was down 102 points or 0.98 percent.
The biggest contributor to the market fall was the metal index which plunged 3.5 percent after US President Donald Trump said that his government would impose hefty duties on imported steel and aluminium.
The index fall was largely aided by stocks including NMDC which tanked over 6 percent while Jindal Steel & Power was down 5.5 percent. The other top losers were Hindalco Industries, JSW Steel, NALCO and Steel Authority of India, each shedding over 4 percent.
According to reserach and broking firm Kotak Institutional Equities, the US import tariffs is expected to have limited impact. The 25 percent import tariff on steel and 10 percent on aluminum can result in lower exports from other countries. Steel exports to US can decline by 9-14 million tonne and aluminum by 600-
700 kilo tonne.
The house believes that the extent of potential steel mill, aluminum smelter restarts in the US will not be meaningful to significantly weaken the outlook on global
aluminum and steel, especially given supply side reforms in China in these industries.
It is of the view that this disruption can be absorbed by improvement in China’s domestic steel mill utilisations and falling exports as it remains a dominant producer, consumer and exporter of steel globally thereby influencing regional steel prices.
"We expect China capacity utilisation to improve to 82 percent in 2018 led by additional mill closures after utilisations improved to 80 percent in 2017, especially led by closure of induction furnaces,"
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