Shares of metal companies rose on May 31 as sentiment improved on the back of positive news emerging out of world’s largest commodity consumer China.
While China’s Shanghai region declared earlier today that COVID-19 wave that had gripped the city over the past few months has been “effectively curbed” paving the way for the region to reopen, the country reported a better-than-expected factory growth later this morning.
One of the largest industrial regions of China, Shanghai, was one of the worst affected areas of the country as it dealt with its worst coronavirus outbreak since the start of the pandemic.
China’s manufacturing purchasing managers’ index for May reached 49.6 as against the estimate of 48.7 and also rose from 47.4 in April as easing of some curbs helped economic activities rebound.
The Chinese government has promised to pump-prime the economy as restrictions ease to ensure that world’s second-largest economy meets its 2022-23 GDP growth target of 5.5 percent. Earlier this month, China’s central bank had cut the key lending rates to boost economic activities.
Analysts believe that China’s reopening could boost the demand outlook for metal sectors as well as boost global commodity prices.
That said, brokerage firm Nomura India Securities noted that domestic steel prices have seen a sharp decline in the week ended May 27 following the imposition of export duty by the government.
India imposed a 15 percent levy on all exports to discourage companies from exporting manufactured steel to global markets where prices are more lucrative.
In China, a key export market, demand is yet to pick up for most metals including steel. “Demand sentiment remains weak. Currently, steel demand is largely from building contractors purchasing steel products only for immediate usage,” Nomura India said in a note.
At 10:20 am, shares of Welspun Corp, APL Apollo Tubes, Tata Steel, JSW Steel, SAIL, NMDC and Vedanta were up 1-2 percent on the National Stock Exchange.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.