In April 2025, copper prices experienced a notable decline, retreating from their highest levels since early April. This downturn is attributed to the contraction in China's manufacturing sector and the escalating trade tensions between China and the United States.

China's Manufacturing PMI Falls Below Expectations

China's official manufacturing Purchasing Managers' Index (PMI) dropped to 49.0 in April, down from 50.5 in March, signaling a shift from expansion to contraction in the manufacturing sector. This decline was more significant than economists had anticipated, reflecting the adverse effects of the ongoing trade conflict with the United States. The contraction in manufacturing activity suggests a weakening in industrial demand, which is a critical factor for commodities like copper.

Impact on Copper Prices and Market Sentiment

Copper, often considered a barometer for global economic health, saw its prices fall by 0.6% to $9,384 per ton by mid-morning in Shanghai. This decline places copper on course for a loss of over 3% in April, following substantial losses at the beginning of the month. The drop in copper prices is indicative of market concerns regarding reduced demand from China, the world's largest consumer of the metal.

Factors Contributing to Copper's Recent Performance

Several factors have influenced copper's recent market performance:

• Supply Constraints: Prior to the recent decline, copper prices had rebounded due to signs of a tighter market, including a shortage of scrap metal and increased demand from China's solar sector.

• Trade Tensions: The imposition of significant tariffs by the United States on Chinese goods has intensified trade tensions, leading to uncertainty and reduced demand for industrial metals.

• Economic Indicators: The contraction in China's manufacturing sector serves as a warning sign for potential decreases in commodity demand, affecting investor sentiment and market dynamics.

Broader Implications for the Metals Market

The decline in copper prices has been mirrored in other base metals, with aluminum and zinc also experiencing price drops on the London Metal Exchange. Additionally, China's steel sector continues to face challenges, as evidenced by Angang Steel Co.'s report of its 11th consecutive quarterly loss. Iron ore futures in Singapore are poised for a third monthly decline, further highlighting the struggles within the metals market.

Outlook and Considerations

The current market conditions underscore the interconnectedness of global trade policies, economic indicators, and commodity markets. As trade tensions persist and economic data from key markets like China continue to influence investor sentiment, the metals market remains susceptible to volatility. Stakeholders will need to monitor these developments closely to navigate the evolving landscape effectively.

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