Aluminium Stocks Slump as US-Iran Deal Eases Global Supply Fears

The recent interim US-Iran deal has sent shockwaves through the metals sector, abruptly ending a massive rally driven by geopolitical tensions. As supply constraints ease, major Indian aluminium players are facing significant selling pressure, signaling a shift in market sentiment.

Geopolitical Truce Triggers Sector Sell-off

The unexpected progress in US-Iran negotiations has neutralized the supply fears that had previously bolstered aluminium prices. With the potential reopening of the Strait of Hormuz, imports that were previously blocked are expected to flow freely, restoring global supply.

The market reaction was immediate. On Tuesday, Vedanta Aluminium Metal saw a sharp 5% decline, while National Aluminium Company (NALCO) and Hindalco dropped by 4.1% and 3.1%, respectively. This contributed to a 1.6% slide in the Nifty Metal Index, even as the benchmark Nifty rose by 0.6%. Analysts suggest that if a formal peace deal is signed around June 19th, further profit booking could drag the metal index down by an additional 5%.

Impact on Global Prices and Production Costs

The truce is expected to unlock approximately 10% of the global primary aluminium supply. This influx, combined with tumbling energy costs that have lowered global production curves, has exerted heavy downward pressure on prices.

Benchmark prices on the London Metal Exchange (LME) have already seen a significant correction. After a six-month rally that saw prices surge nearly 9% in March during the height of the war, LME aluminium plummeted over 8% in June. Prices recently hit levels around $3,333.75 per metric tonne. Technical indicators, such as the Daily Relative Strength Index (RSI), have moved into a neutral-to-bearish zone, suggesting the sector may consolidate toward a global price floor of $3,200 to $3,250.

Outlook for Indian Aluminium Majors

While the near-term outlook appears bearish, analysts note that the high prices seen during the conflict likely bolstered Q1 earnings for Indian companies due to expanded margins. However, long-term price projections remain conservative, with LME prices expected to hover around $3,300 for FY27 and drop to $3,175 by FY28.

עבור משקיעים המחפשים נקודות כניסה, מומחים מציעים להמתין לתיקון. Jateen Trivedi מ-LKP Securities ממליץ להמתין לתיקון של 5-8% במדד לפני הקצאת הון, ומציין כי NALCO עשויה להפוך לאטרקטיבית לאחר ירידה של 15%.

מבחינת בחירת מניות, Hindalco Industries מודגשת כ"בחירה הגנתית". זאת בשל חברת הבת שלה שבסיסה בארה"ב, Novelis, שמייצרת יותר ממחצית מהכנסותיה באמצעות עיבוד במורד השרשרת (downstream processing). מכיוון ש-Novelis מסתמכת על מרווחי המרה (conversion spreads) ולא על מחירי LME ראשוניים ותנודתיים, היא נותרת מוגנת מבנית מההשפעה הישירה של ירידת מחירי מתכות הבסיס.

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