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

The recent interim US-Iran deal has abruptly ended the war-driven rally in base metals, causing a significant sell-off in Indian aluminium stocks. As supply constraints ease and global inventories stabilize, investors are bracing for a period of consolidation and potential price corrections in the metal sector.

Market Reaction: Vedanta and Nalco Lead the Decline

The announcement triggered a sharp downturn across the Indian metal landscape. On Tuesday, Vedanta Aluminium Metal witnessed a steep 5% drop, while National Aluminium Company (Nalco) and Hindalco fell by 4.1% and 3.1%, respectively. This volatility resulted in the Nifty Metal Index sliding 1.6%, even as the benchmark Nifty managed a marginal gain of 0.6%.

This reversal follows a massive rally where the Nifty Metal Index jumped nearly 7% since the onset of the war, contrasting sharply with the 5.3% decline in the broader Nifty index during the same period. Analysts suggest that the "war premium" previously enjoyed by aluminium producers is now being eroded as geopolitical tensions subside.

Supply Surge and Falling LME Prices

The primary driver behind the slump is the expected reopening of the Strait of Hormuz, which is anticipated to unlock nearly 10% of the global primary aluminium supply. With imports no longer stuck due to geopolitical blockages, the sudden influx of metal is putting downward pressure on benchmarks.

Prices on the London Metal Exchange (LME) have already seen a significant correction, tumbling over 8% in June alone after a six-month winning streak. LME aluminium prices recently hit lows around $3,333.75 per metric tonne. Market experts project that prices could further stabilize toward a global floor of $3,200 to $3,250. Long-term forecasts suggest LME prices may hover around $3,300 for FY27 and drop to $3,175 by FY28.

Investment Outlook: Profit Booking and Defensive Plays

Meskipun tren jangka pendek tampak bearish, para ahli pasar sedang mengidentifikasi titik masuk strategis bagi investor jangka panjang. Jateen Trivedi dari LKP Securities memperingatkan bahwa jika kesepakatan damai formal ditandatangani pada 19 Juni, aksi ambil untung lebih lanjut dapat menyeret indeks logam turun sebesar 5% tambahan. Ia menyarankan untuk menunggu koreksi sebesar 5-8% sebelum mengalokasikan modal baru, serta mencatat bahwa Nalco bisa menjadi pilihan beli yang menarik setelah turun 15% dari level saat ini.

Terlepas dari volatilitas harga, laba Q1 bagi pemain utama aluminium diperkirakan akan tetap kuat karena margin tinggi yang diraih selama lonjakan harga baru-baru ini. Bagi investor yang mencari stabilitas, Hindalco Industries disorot sebagai pilihan defensif utama. Hal ini terutama disebabkan oleh anak perusahaan hilirnya di AS, Novelis, yang menghasilkan lebih dari setengah pendapatannya melalui selisih konversi pemrosesan, alih-alih hanya bergantung pada harga primer LME yang volatil.

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