When Trump’s tariffs come into effect, will India not be a major metal exporter for the US, but will it have a major impact on domestic industries significantly affect global metal prices?
As we all know, after Trump’s inauguration in mid-January, the market was fairly unstable, mainly due to global uncertainty regarding policy, tariffs. Customs duties will undoubtedly boost US metal prices as imports are restricted. Excessive supply in global markets, particularly China and the EU, can cause price fluctuations, but India must be told that it has an indirect effect or that it is a mix of direct and indirect effects. It must be.
India is not a major exporter of metals to the US, but a global price shift will certainly affect domestic pricing. If Chinese producers or European Union producers divert supplies to other countries, including India, we may see a gluttony about oversupply. Therefore, the competitiveness of costs will also decrease due to imports into India. Therefore, we may see an oversupply affecting our domestic industry, particularly in the metals sector.
Therefore, dumping of metals coming into India from the EU or China and price fluctuations can lead to increased production costs.
However, import costs are expected to rise.
For volatility, if you are buying copper at a specific price and copper price due to customs duties and uncertainty, the price means that it will reach a completely different level. So, there is a huge difference between the two days and the price of what you bought yesterday and what you bought today. And if the price is high, you definitely import the metal at a higher price and use it as an input, so the higher the price, the higher the production cost. That’s what I’m trying to say.
Are there any particular sectors that are more affected than other sectors?
I think the automotive industry and infrastructure setup will definitely be affected by what is going on. In particular, I think these are two industries that have a huge impact, as infrastructure uses these metals in a variety of purposes and in the automotive industry. So it will mainly be these two sectors. But yes, manufacturing will certainly be another part of the impact, but the driving force is good for initiatives like “make-up in India.” If we are looking at it as an example, we will import steel and collect basic tariffs of about 7% to 8% for various grades that import steel. For example, if India is imported at 7%, then if China’s steel is tariffs at about 25%, the land cost or steel import costs will be much higher in the US for Chinese products. Land there. Therefore, China will be able to find, or other countries of these metals will find another country or source for the supply of what they produce. India imports, so it collects 7% to 8%. For example, if China is dumped on India at 7-8%, the competitiveness of the Indian market will be hit. They require the government to have a 15-20% protection obligation, above 7-8%. Therefore, the possibility of dumping would be reduced as a country like China would dump metals into India.
So it means that it is competitive, with import duties of 20-25% in India and at the same time, it also carries the same kind of obligation in the US. Therefore, domestic suppliers or domestic industries will protect their interest by claiming basic tariffs of 7% to 8% for this additional obligation. So I think that is something we should consider as long as we adhere to our interests and as far as the domestic interests of the manufacturer are concerned.
In fact, there has been a long-standing demand from the industry to collect between 20% and 25% of the obligations on steel. So, did I just want to understand what the impact would be on the margins of domestic companies if the government agreed to collect this obligation?
The impact will no longer be doubted. As mentioned earlier, it becomes a much more driving force for the locals. Look, there are certain numbers I want to share with you. Currently, India is the second largest producer of crude steel, but imports have completed the steel in a certain number.
I would also like to touch on the impact of the rupee. We basically see that the rupee is decreasing the curve and currently trading around 86 against the dollar. Understand the impact of falling rupee on domestic metals markets.
Very relevant questions. The Dollar Index is actually highly regarded for the 110 levels of Trump entering and posting elections in the US. Currently 107 and 108. The dollar index is declining, but the rupee is barely valued. Various factors have also influenced emerging market currency and therefore India.
Apart from geopolitics, the other is the FPI or FII spill. Therefore, since September and October last year, around $2.5 billion to $30 billion has flowed. It’s just that domestic markets, institutions, have been able to withhold certain types of money that will leave the Indian capital market. But it was one of the other reasons, as it has been selling between $25 million and $3 billion, and it’s the month that saw the moon’s leak.
As far as other countries are concerned, we have a positive outlook in terms of our position, from the perspective of RBI’s foreign readiness, and governments will move towards full throttle in terms of reform, political scenarios, all of them, consumption. The story is posted on the budget.
But going back to the fall problem, wouldn’t it make imports expensive for us…?
I was coming to it. I was trying to answer your question that the dollar fell to your question, but Rupee is not grateful. So the RBI intervened… The RBI used its foreign exchange reserve to maintain the rupee. Now you rightly said that it would have an impact. Therefore, it is positive for the services sector industry, which exports all export-oriented industries. But at the same time, I think that most import-oriented industries will feel the impact of the rupee depreciation on the dollar, as imports will be injured.
What is the situation with the basic metals, where is the current action and where is it delayed?
Actions are only available in two base metal packs. One is copper and the other is aluminum. Therefore, there are only two base metals that have the impact spoken for these tariff discussions. One is aluminum and the other is copper. I really don’t know what is there for the other metals themselves. But for now, at this particular moment, I can only comment that aluminum and copper were the most hits, especially due to the tariff consultations with China, Mexico and Canada.
After mutual tariff announcements were made, copper prices skyrocketed, and then they are now in a kind of cooling…
So that (price trends) was speculative. It was pure and pure speculation. Now, I imagine that although aluminum is in oversupply anyway, I still mention that the price is a high advantage. So there’s no reason. It was basic news about tariffs. The equations around tariffs, people who come to the reality of adapting to tariffs, and therefore, speculative rulings have been happening between the LME and CME, and I have seen prices be supported.
As far as demand is concerned, I say there’s a hang of global oversupply out there anyway. We don’t see much about the benefits of aluminum as the market feels it is under pressure. However, in the case of copper and nickel, as far as other basic metals are concerned, we still feel like we are buying a dip strategy.
But I’m always hedging exposure in regards to metals and currency, because I’m listening to this particular part or to all people who are interested in this show, they usually hedge exposure in terms of metals and currency, as we’re not normally the same I recommend you have to do the era. Because the market is unstable, volatility has a major impact on margins if not hedged.
What kind of trades should a trader actually do?
It’s called nickel and copper. Copper is still available for purchase in dip. Currently, DIPS is not relevant at the moment, but it is on a slightly lower level than us.
But I don’t think there’s real demand for aluminum for how prices have risen. So shy away from aluminum. You may see a bearish trend in the short term.
But in India, yes, definitely in MCX, you need to hedge your position in terms of metal. At the same time, as I said earlier, currency becomes unstable.
We’ve seen gold and silver rise in anything, so I just wanted to take your views on bullion as well. So what’s your advice for bullion investors?
I think the $3,000 level is something to be noted. It is a safe haven and comes to the central bank, geopolitics, global uncertainty, the Federal Reserve. Despite the dollar being depreciated, we still mean to say… …, very difficult these days. Too many factors affect too many things. So, personally and professionally, we are at the level of $2,950 to $3,000, and we are approaching those levels and we are saying that touching 2,960, 2,970 should be higher for now. Masu. If you don’t see anything negative…
In MCX, what is the target?
Rs 86,000-85,000.
So does that mean that gold will see some correction from the current level?
I think it’s there so it’s going to be about 85,000-84,000
Are these levels suitable for creating entries for fresh investors?
no. That way, you should not lump sum payments at these levels. So, we are honestly in a very tricky world. Gold serves your purpose. Silver is a completely different story. Gold serves its purpose as a safe haven. Well, due to these issues we have faced over the past month and a half, we are seeing the demand for safe shelters coming. Buying jewelry in India, etc.
This is just a relationship between the dollar, the price of the dollar, and the depreciation of the rupee, so the dollar is the rupee multiplied by the rupee, and the gold price is the condition of the rupee. The central bank is fine.
There is no doubt that people are buying gold to diversify their assets. As you raised this, I’ve always kept saying in this story that about 10% of your portfolio should always be in safe shelters, especially money. The means had ETFs in the physical market, although there are many things a decade ago.
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(Disclaimer: recommendations, suggestions, opinions and opinions given by experts are unique. These do not represent views of the economic era.)
