Metal stocks hit by profit concerns after fall in global commodity prices

MUMBAI: Metal stocks were the worst performers in Monday’s trade, as investors feared that the fall in global commodity prices would impact profits for Indian metal manufacturers as well. But even as concerns relating to sustained demand for these metals still exist, the price fluctuations seen over the past few trading sessions are not likely to have a major impact on the final price of the products.

Commodity prices have crashed over the past few trading sessions as investors have been pulling out money, given the growing belief that policy makers in the US and Europe are running out of ammunition to halt another global recession. Base metals were the biggest losers on mounting concerns that Chinese demand would not be adequate to hold prices.

Data, which showed that China’s September PMI (purchasing managers Index) fell to a 2-month low, buttressed these concerns. On the LME, copper fell by over 7% on Monday to around $6,800/tonne, its lowest level in over a year. Following suit were aluminium, zinc and lead. In Shanghai, steel makers have been forced to drop prices by 2-5% on account of high inventories.