China’s Shock Move Sends Indian Metal Stocks Shares of Nalco, Hindalco, and Vedanta surged by up to 9% on November 18, following China’s recent decision to reduce or cancel export tax rebates on certain aluminium and copper products. This move is expected to tighten the global supply of these metals, potentially benefiting Indian producers.

China, the world’s largest producer of aluminium and alumina, exports significant quantities of aluminium in semi-finished forms. A reduction in these exports could lead to supply constraints globally, driving up prices and creating opportunities for Indian companies like Nalco, Hindalco, and Vedanta.

National Aluminium Company Limited (NALCO) shares saw the most significant gains, rising over 9% during early trading. By 10:25 AM, the stock was trading 9.3% higher at ₹240.32 per share on the NSE, marking its second consecutive day of gains. The stock opened with a 2.79% increase.

Hindalco Industries Ltd also experienced a strong uptrend, with its stock reaching an intraday high of ₹656 per share, up 4.57% from its previous close. Vedanta shares similarly drew strong investor interest, climbing nearly 4% to trade at ₹450.10 per share at 10:30 AM.

China’s reduction in export tax rebates is expected to limit the availability of certain semi-finished aluminium products in the market, as highlighted by a recent note from the Shanghai Metal Market. This development could benefit other global and regional aluminium producers in the short term.

 

China’s Shock Move Sends Indian Metal Stocks  China’s Ministry of Finance announced on Friday its decision to reduce or eliminate export tax rebates on a broad range of commodities and products, effective from December 1.

The export tax rebate for select items such as refined oil products, photovoltaic components, batteries, and certain non-metallic mineral goods will be lowered from 13% to 9%. Additionally, the rebate will be entirely removed for aluminium and copper products, as well as chemically modified oils and fats derived from animals, plants, or microbes.

This policy change caused aluminium prices to rise sharply on the London Metal Exchange as traders anticipated a decline in Chinese aluminium exports, which could tighten global supply.

The announcement also impacted U.S. soyoil prices, as it appears Chinese exports of used cooking oil — often categorized under the chemically modified oils and fats classification — will be affected. Chinese exports of used cooking oil to the U.S. and Europe, primarily for biofuel production, have increasingly competed with locally sourced feedstocks like soyoil.

 

China’s Shock Move Sends Indian Metal Stocks  Shares of National Aluminium Company (NALCO), Hindalco, and Vedanta saw a sharp rise of nearly 10% on the National Stock Exchange (NSE) following China’s decision to eliminate a 13% tax rebate on aluminium and copper products, effective December 1, 2024.

 

NALCO

NALCO shares surged to a day high of ₹240.32 per share, marking an almost 10% gain. By mid-morning trading, the stock was priced at ₹237.31 per share, reflecting a 7.93% increase or ₹17.44 per share.

 

Hindalco

Hindalco shares also experienced a boost, climbing more than 4.5% on the NSE. The stock reached a day high of ₹656 per share, up 4.56%. By late morning, it traded at ₹649.95 per share, a rise of 3.60% or ₹22.60.

 

Vedanta

Vedanta shares followed suit, hitting a day high of ₹452.50 per share after opening at ₹444.35. By mid-session, the stock traded at ₹448.75 per share, an increase of 3.54% or ₹15.35.

 

Impact of China’s Tax Policy Change

China announced that it would discontinue the 13% export tax rebate for copper and aluminium products starting December 1. Historically, China’s aluminium industry has been a significant exporter, shipping large volumes of semi-finished products used for remelting or in value-added manufacturing.

In 2023, China exported 5.7 million tonnes of aluminium, and exports rose by 17% in the first 10 months of 2024, reaching 5.5 million tonnes. Total exports for 2024 are projected to hit 6.6 million tonnes, accounting for 15-16% of China’s total aluminium production.

This policy change is expected to tighten global supply and potentially raise prices, benefiting Indian producers like NALCO, Hindalco, and Vedanta.

The 7% surge in shares of NALCO, Vedanta, and Hindalco on November 18, 2024, was triggered by China’s announcement over the weekend to withdraw the export tax rebate for aluminium and copper products, effective December 1. Previously, these exports benefited from a 13% rebate, which made Chinese aluminium more competitive globally.

China has historically exported large volumes of aluminium as semi-finished products, which are either used in manufacturing or remelted into basic forms. With the tax rebate removed, it is expected that China’s aluminium exports will decline, tightening global supply and potentially boosting aluminium prices. This move contributed to a sharp rise in aluminium prices on the London Metal Exchange, jumping 8.5% on Friday before settling at a 5.5% gain.

In 2023, China exported 5.7 million tonnes of aluminium, with a 17% increase in shipments in the first 10 months of 2024. By the end of the year, exports are expected to reach 6.6 million tonnes. China’s aluminium exports account for 15-16% of its total production and 20-22% of global production outside China.

For Vedanta, aluminium is its second-largest business segment after Hindustan Zinc, while for Hindalco, its majority earnings come from Novelis, followed by the Indian aluminium business. Aluminium is also NALCO’s primary product, followed by alumina.

Following the announcement, shares of NALCO rose by 6.1% to ₹233.3, while Vedanta and Hindalco saw gains of 2.7% and 3.5%, respectively. Prior to this surge, shares of NALCO had fallen 6% in the last month, while Vedanta and Hindalco had declined by 10% and 17%, respectively.