In India on Friday, metal stocks turned lower on concerns over possible monetary tightening to come over the weekend from China. The BSE Metal Index was down 0.6% with Hindalco Industries down 1.1% to 219.75 rupees ($4.86), Jindal Steel down 0.9% at 654.70 rupees and Tata Steel down 1.2% at 616.30 rupees.
China is the world’s biggest consumer of metals, so a drop in sales volume could hurt suppliers.
“Apart from the fears of monetary policy tightening in China, a strong dollar against the rupee also remains a cause for concern,” says managing director Deven Choksey of K.R. Choksey. Recent strength in the U.S. dollar pushes down metal prices, quoted in dollars, as the local currency’s buying power falls, hurting demand. Mr. Choksey is still bullish on the sector in the long term owing to expectations of high demand.
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