Metal Shares Plunge 3.5% as US-Iran Tensions Drive Dollar to Three-Month High

Metal Stock Prices Decline Amid Dollar Surge and Conflict in the Middle East

On March 13, the Nifty Metal index fell by 3.5% to 11,442.8 at 11:35 am as the US dollar rose to a three-month high. This marks the second weekly gain for the dollar since the beginning of the war in Iran.

Aluminium makers Hindalco and Nalco dropped by 4.5% and 5.5%, respectively, tracking a decline in global aluminium prices. The aluminium price retreated from its highest level since 2022 on Friday, with other base metals also declining due to concerns over economic fallout from the Middle East conflict.

Aluminium prices on the London Metal Exchange declined by 1% to $3,481.50 a tonne as of 5:56 a.m. after rising about 4% over the previous three sessions. Prices of copper, zinc, and nickel also moved lower.

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The intensifying conflict in the Middle East has heightened fears of a stagflationary shock, as soaring energy costs risk driving inflation while weakening economic growth. Industrial disruptions across the region remain widespread, with shipments of commodities through the Strait of Hormuz nearly coming to a standstill.

Economic Impact

The dollar's surge has led to a decline in the euro, which fell to its lowest level since November. Japan warned that it was ready to take action to protect against declines in the yen, which touched its weakest point in 20 months.

The conflict in the Middle East has also led to a surge in oil prices, with the US permitting the sale of some Russian petroleum products that had been sanctioned due to Moscow's hostilities in Ukraine. Iran stepped up attacks on oil and transport facilities across the Middle East as its new Supreme Leader Mojtaba Khamenei vowed to keep the Strait of Hormuz shipping lane closed.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Market Response

Already, Aluminium Bahrain BSC has declared force majeure to customers due to logistical disruptions. However, Norsk Hydro ASA, a joint-venture partner in Qatar Aluminium Ltd., said the major smelter will be able to avert a full shutdown after securing natural gas supplies.