NIFTY Metal index crashes another 7% after nosediving over 7% last week. Tata Steel, Vedanta slide over 9%; things to know amid trade war

Former World Bank Chief Economist Kaushik Basu on Sunday described the reciprocal tariffs imposed on approximately 60 countries by the Trump administration as baffling, saying that while these tariffs will have some adverse effects on India, the major impact will be felt in the US.

Basu further said that it is also not a reciprocal tariff, as the Trump administration calls it; it is based on the trade deficit the US has with India.

The trade war further escalated after China on Friday slapped a 34% additional tariff on imports from the US in a tit-for-tat response to President Donald Trump’s move to impose a similar levy on Chinese goods.

Beijing also announced export controls on certain rare earth metals, aiming to hit the American defence, computer, and smartphone industries.

The tariffs on all products imported from the US will be imposed from April 10, the Customs Tariff Commission of the State Council announced Friday.

The metal stocks, among other sectors, have been hit severely amid economic uncertainties following the trade war.

The NIFTY METAL index crashed as much as 7.37% last week. Add to that, the index, in the opening deals on Monday, April 7, tanked another 7%.

All 15 constituents were trading in the red. The NIFTY METAL Index was trading 7.18% lower at 7,810.45 levels.

Lloyds Metals And Energy was trading 7.83% lower at 1,140.30 levels.

What lies ahead?

Indian metal companies, according to reports, are gearing up for significant expansions in the current fiscal year, focusing on growing domestic demand, notwithstanding global trade headwinds.

While the United States has announced certain tariffs on metals, companies such as Vedanta, JSW Steel, Hindustan Zinc, and NALCO are also betting on India's strong demand, the global race for critical minerals, and strategic geographic diversification to drive growth, analysts said.

Domestic steel demand is forecast to grow by 10% annually over the next few years. Similarly, the demand is expected to grow at a CAGR of 7.2% till 2030.

Industry experts predict India's aluminium demand will double every five years, supported by the Indian government's allocation of ₹11.21 lakh crore for infrastructure development in the 2025-26 budget.

As other countries face higher tariffs, companies may look to diversify production into India, creating a positive spillover effect on domestic demand. Companies like Vedanta, Hindustan Zinc, and others with a strong domestic focus would thus be relatively insulated.

FY26 expansion plans

Vedanta Limited, the aluminium-to-oil conglomerate, has significant expansion plans for the fiscal year driven by growth in India's core sectors like infrastructure, railways, auto and defence. The company sells nearly 50 per cent of its total aluminium production in India.

Vedanta's aluminium division is increasing production capacity to 3 million tonnes and has acquired one of Odisha's largest high-grade bauxite mines to support this expansion. The company said in its third-quarter earnings call that its BALCO smelter expansion is at an advanced stage, with commissioning targeted in FY'26. Vedanta Aluminium aims to increase its share of value-added products to over 90% from the current 60% to capitalise on India's growing construction and electric vehicle markets.

Similarly, Vedanta's subsidiary, Hindustan Zinc Ltd (HZL), has recently set up a 30,000-tonne-per-annum zinc alloy plant in Rajasthan to cater to the growing domestic demand for value-added zinc alloys. Chairperson Priya Agarwal Hebbar recently said Hindustan Zinc has a vision of doubling its metal production to 2 million tonnes per annum within the next five years.

Aluminium giant Hindalco said on its investors' day that it expects copper, e-waste recycling, and continuous copper cast rod projects to be commissioned this fiscal year.