Metals Miss US Tariff Relief: Silver Soars, Analysts Pick Stocks

COMMODITIES

Overview

Steel and aluminium tariffs under the India-US trade agreement will persist, with ICICI Securities noting metals are excluded from duty reductions. However, improved trade flows for other sectors may offer indirect demand support for metal companies. Analysts also revised silver price estimates significantly higher, anticipating potential gains. The focus shifts towards ferrous metals for near-term demand, with Tata Steel named a preferred pick.

Metals Face Continued US Tariffs

Steel and aluminium producers will not see direct tariff relief under the recent India-US trade agreement. Vikash Singh, Vice President at ICICI Securities, confirmed that the 50% tariff on these metals will remain in place. This exclusion contrasts with duty reductions on numerous other Indian exports, which saw tariffs drop from as high as 50% to 18%.

Indirect Demand and Sector Preferences

Despite the direct tariff exclusion, related sectors that benefit from enhanced trade flows could still provide a positive, albeit indirect, demand boost for metal companies. Singh maintains a positive long-term outlook on select metal stocks, including Vedanta.

Ferrous Metals Lead the Way

Within the metals sector, ICICI Securities currently favors ferrous metals over non-ferrous alternatives. This preference is underpinned by expectations of strong demand in the coming months, coinciding with the peak season. Tata Steel is identified as a favored pick among ferrous metals, while Vedanta remains a key choice in the non-ferrous category due to its commodity exposure and demand outlook.

Silver Price Surge Expected

Commodity price forecasts have also seen upward revisions. Silver price estimates have been raised substantially, with current projections factoring in $90 per ounce, a significant increase from earlier estimates of $53-$57 per ounce. This revision suggests a bullish sentiment for silver.

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