China’s NDRC stimulus shortfall triggers 2-5% decline in metal stocks amid 2% Nifty metal index drop

China’s National Development and Reform Commission (NDRC) disappointed global investors on October 8 by withholding major new stimulus measures, despite expressing confidence in achieving the country’s economic growth target for the year. The state planner’s announcement, which outlined a roadmap for economic recovery but lacked fresh large-scale stimulus initiatives, triggered a sell-off in metal stocks, both in China and India.

Indian metal companies, including NMDC, NALCO, Tata Steel, and JSW Steel, saw their shares drop between 3-5 percent in response to the NDRC’s update. The lack of substantial new stimulus initiatives from China dashed investor hopes, as the country’s recent fiscal measures had raised expectations for further economic support. Additionally, a sharp decline in SGX iron ore prices further exacerbated the negative sentiment, pushing down the stock prices of key steel manufacturers.

The highly anticipated press briefing by China’s NDRC left investors underwhelmed, despite the commission’s confidence in hitting its economic growth target of around 5 percent for 2024. While previous actions had fueled expectations of additional fiscal stimulus worth trillions of yuan, doubts remain about the country’s ability to sustain long-term growth without more aggressive intervention.

Investors had been looking for significant stimulus measures to restore confidence in the face of sluggish consumer spending, a prolonged property sector downturn, and rising trade tensions. These challenges are pressuring new growth areas, such as electric vehicle exports, and raising concerns about whether China can maintain its status as a global growth engine.

China, the world’s largest importer of metals, plays a crucial role in driving global demand for commodities like iron ore and steel. The combination of internal economic challenges and the NDRC’s reluctance to introduce major stimulus is casting doubt on the strength of China’s metal consumption in the near future. As a result, metal companies, particularly those that rely on exports to China, are feeling the strain of the slowdown.

The lack of decisive action by China’s policymakers may signal that the economic revival investors were hoping for could take longer to materialize, which could lead to continued weak demand for metals. This uncertainty is further souring market sentiment, not only in China but also in other economies tied to the global metal supply chain, including India.

While China’s NDRC has expressed confidence in meeting its 5 percent economic growth target for the year, the absence of major stimulus measures is casting doubt on the country’s ability to drive a robust recovery. For metal companies, both in China and abroad, the lack of new economic fuel is creating uncertainty around future demand, leading to significant market losses. Investors will be closely watching for any further developments that could indicate whether China’s economic rebound will gain traction or continue to stall, keeping pressure on global metal markets.