China’s war on smog lifts metal, coal stocks in India
On Thursday, China has ordered steel and aluminium producers in 28 cities to slash output during winter, outlined plans to curb coal use in the capital and required coal transport by rail in the north as Beijing intensified its war on smog, according to a Reuters report.business Updated: Mar 02, 2017 21:46 IST
Indian metal and coal stocks shined in bourses after China imposes curbs on steel, aluminium and coal output, which may hike prices and improve valuations of companies in competing nations.
The BSE metal index was up 1.5% to hit 12,306.54 in intraday trade in a firm Mumbai market whose benchmark Sensex was up 0.3%.
National Aluminium jumped as much as 7% while Vedanta gained 3%, Hindalco and Coal India 1% each in intraday trade.
On Thursday, China has ordered steel and aluminium producers in 28 cities to slash output during winter, outlined plans to curb coal use in the capital and required coal transport by rail in the north as Beijing intensified its war on smog, according to a Reuters report.
China has swayed metal prices as its metal companies ramped up capacity, continued with massive production and dumped cheaper products in global markets.
Countries like India have imposed safeguard and anti-dumping duties to protect domestic firms, many of whom have suffered huge losses and piled up bad debts of banks.
China has called on steel producers to halve output in four northern provinces—Hebei, Shanxi, Shandong, Henan—as well as Beijing and Tianjin, during the peak winter heating months around late November to late February. The size of the cuts will depend on the level of regions’ emissions cuts.
Chinese companies have also been asked to cut aluminium capacity by more than 30% and production of alumina by more than 30% across the 28 cities.
Based on the cuts over three months, the measures would reduce China’s total annual steel output by 8% annually and aluminium output by 17%, according to Reuters calculations.
The clamp down on metal production comes ahead of the Chinese government’s annual parliamentary session on Sunday, which may take up pollution as a big topic of discussion.