Shares of Welspun Corporation, National Aluminium Company (NALCO), Hindustan Copper and JSW Steel rose more than 3%, while Hindalco Industries, NMDC and Vedanta gained around 2% each.
The Nifty Metal index was trading nearly 3% higher in mid-day deals, extending gains for a third straight session.
What is driving the rally in metals?
1. Rate cut hopes in the US: Federal Reserve funds futures are pricing in an 87% chance of a 25 basis points cut in September. Investors are now watching Friday’s non-farm payrolls data, which will shape expectations on the pace of rate easing.
2. China’s anti-involution drive: Beijing is stepping up efforts to reduce excess capacity and curb disorderly pricing in industries such as steel and base metals. The move could help ease the supply glut and support global prices.
3. Better-than-expected Chinese economic data: The country’s manufacturing Purchasing Managers’ Index for August stood at 50.5, the fastest pace of expansion since March, while the services PMI came in at 53.0, both beating estimates.
4. Safeguard duty on steel imports
: India’s Directorate General of Trade Remedies has recommended a three-year safeguard duty on steel imports, 12% in the first year, 11.5% in the second, and 11% in the third. The duty is expected to shield domestic producers and remove a key overhang.
5. Improving China-India relations: Warming ties between the two countries are boosting investor sentiment.
Company updates for August 2025
MOIL: Production rose 17% to 1.45 lakh tonnes in August, while output for April-August was up 9.3% year-on-year at 7.92 lakh tonnes. The company has delivered strong growth but will need to scale up further to meet its 20% annual volume growth guidance.
Coal India: Offtake rose 7.6% to 56.7 million tonnes in August, the first positive month after four straight months of decline. Year-to-date offtake, however, was down 3.3% at 301.9 million tonnes.
NMDC: Total sales rose 8% to 3.39 million tonnes in August, driven by higher volumes from Karnataka.
Meanwhile, global brokerage CLSA wrote in its note that China is set to cut steel capacity by 50 million tonnes in calendar year 2025, targeting an 8.5% reduction in production for the rest of the year. Although Chinese steel production has already fallen by 20 million tonnes in the first seven months of 2025, exports remain at record highs.
CLSA said that efforts to resolve the demand-supply mismatch over the past 18 months have had limited impact. However, it expects spreads to improve as markets tighten, boosting the profitability of Indian steel mills.
The brokerage has revised its earnings before interest, taxes, depreciation and amortisation (EBITDA) estimates for metals and mining companies under coverage by minus 4% to plus 8% for FY26-FY28, while adjusting target prices by minus 3% to plus 6%.
CLSA said it prefers Jindal Steel and Power due to its strong capacity-led growth outlook and continues to favour aluminium, citing a tighter demand-supply balance.