Tata Steel Shares Plunge 8% as Iran Conflict Hits Metal Stocks

The share price of the Mumbai-headquartered Tata Steel saw significant losses as the crisis in Iran pummeled sectors in the equities market. On Wednesday, the value of Tata Steel’s share plunged to ₹194.43, down by nearly 8% from the previous close of ₹211.01. The stock already shed 8.40% in losses for the past 5 days. Iran Crisis Effect on Metal Stocks Tata Steel’s stocks dipped as the escaping geopolitical tension between Iran, Israel and the US along with the conflict-linked blockade of the Strait of Hormuz significantly impacted major trade routes. Analysts said that supply disruption concerns caused aluminum prices to surge globally, triggering a broader sell-off in metal stocks. The Strait of Hormuz serves as a key shipping route for Middle East metal producers. Bahrain, Qatar, Saudi Arabia and the United Arab Emirates collectively account for more than 8% of the world’s aluminum output and more than 5 million metric tonnes of the metal pass through the waterway each year. The Qatar-based aluminum producer Qatalum also suspended production as the Iran conflict caused shortage in natural gas. Amid the sell-off in metal stocks, the share price of the Indian iron ore producer Vedanta and the top integrated zinc producer and major lead and silver supplier Hindustan Zinc also witnessed large losses this week. Cyclical Sectors Market observers also said that heightened geopolitical tensions or global risks are likely to cause investors to move away from the so-called cyclical sectors whose performance heavily depends on economic activities. Steel companies and infrastructure firms belong to this category. Steel is extensively used in construction, automobiles, infrastructure and manufacturing. As the tension in Iran worsens and leads to significant increase in energy costs, investors expect weaker demand for the material in anticipation that the situation in West Asia will impact economic growth.