Metal shares surge as West Asia conflict fuels global aluminium price spike

Mumbai: Metal stocks emerged among the top gainers in Thursday’s market rebound, led by aluminium manufacturers as supply disruptions following the closure of the Strait of Hormuz – a key transit route off Iran’s coast used to ship oil, gas, and other products from the Gulf region- amid the West Asia conflict are seen pushing up prices. National Aluminium Co jumped 6.6% Thursday. Hindalco, Lloyds Metals, and Welspun Corp gained over 3% each, while JSW Steel and NMDC rose 2.9% and 2.4%, respectively.

The Nifty Metal Index gained 2.3%, while the benchmark Nifty rose 1.2% on Thursday. All constituents of the metal index ended higher except Steel Authority of India.”Base metal prices have risen after the closure of the Strait of Hormuz, which implies supply constraints,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities. “Shipments through this sea route have declined, and the situation remains critical.”

West Asia accounts for around 8% of global aluminium capacity. It is heavily reliant on the Strait of Hormuz for both metal exports and alumina imports, with key producers, including Saudi Arabia, the UAE and Bahrain, according to ING.

The closure of Qatalum’s aluminium mine operations in Qatar has been a key concern over potential supply shortages. Given the widening West Asia conflict, Aluminium Bahrain, which runs one of the world’s largest smelters, warned customers on Wednesday that it had halted shipments, stoking supply concerns, according to a Reuters report.

“This has played out during the Russia-Ukraine war in 2022 when Russian mines were closed due to the conflict and sanctions,” said Trivedi.Aluminium prices rose nearly 1% on Thursday but later erased gains to trade 0.8% lower. So far in March, base metal prices have jumped 5.2%

“Higher aluminium prices indicate improved realisations and translate into better earnings for these companies, which has boosted share prices,” said Vyom Chheda, Research Analyst, StoxBox. Although aluminium prices have moved higher in the last couple of sessions, bearish investor sentiment over the past two sessions outweighed the gains expected from higher base metal prices, Chheda said.

Over the past month, the Nifty Metal Index has climbed 1.1%, while the benchmark Nifty has dropped 3.4%. Trivedi said aluminium prices are expected to move in the broad range of $3100–$3500 in the near term, with sharp swings anticipated.

“Metal stocks are expected to inch higher; however, the rally is expected to be violent and volatile,” said Trivedi, whose top picks are Hindalco and Nalco. If Tata Steel and JSW Steel fall 5–10%, they are also attractive bets, said Trivedi. In 2026, the Nifty Metal Index has surged 7.1%, while the benchmark Nifty has tumbled 5.3%. “The rally in metal stocks is expected to continue as demand remains robust and supply is expected to remain capped in the near term,” said Chheda. “Hindustan Zinc and Nalco are the top bets in the sector,” he said.