Copper Falls From Four-Week High as China’s Manufacturing Slows

The global copper market faced a sharp correction in April 2025, dropping nearly 20% from its March peak, as China’s manufacturing sector contracted for the first time in two months. The decline underscores the deepening interplay between trade tensions, supply chain disruptions, and weakening demand—a dynamic that has left investors bracing for further volatility.

China’s Manufacturing Sector Retreats into Contraction

China’s official manufacturing Purchasing Managers’ Index (PMI) for April plummeted to 49.0, below the breakeven threshold of 50, marking the fastest contraction since early 2025. This stark reversal from March’s expansionary reading of 50.5 reflects the crushing impact of U.S. tariffs—now at 145% on Chinese goods—which slashed export orders. Meanwhile, the Caixin PMI, which focuses on smaller private firms in southern China, dipped to 50.4, barely staying in expansion territory. Both surveys highlighted a sharp decline in new export orders, with foreign demand contracting at the fastest pace since July 2023.

The composite PMI, combining manufacturing and non-manufacturing activity, also weakened to 50.2, barely above 50. Analysts like Wang Zhe of Caixin Insight Group warn that the ripple effects of U.S.-China trade friction will intensify in coming quarters, urging policymakers to act swiftly with fiscal and monetary stimulus.

Copper Prices Plunge Amid Trade Wars and Supply Shocks

Copper, often dubbed the “economic bellwether,” mirrored China’s manufacturing slowdown. After hitting a record high of $5.22/lb on March 26, prices plummeted to $4.26/lb by April 7, a drop of nearly 20%, as fears of a U.S. recession and trade-induced demand destruction took hold.

The decline was exacerbated by supply disruptions. A February power outage in Chile, the world’s largest copper producer, briefly disrupted output at BHP’s Escondida mine. Meanwhile, Glencore’s Altonorte refinery—responsible for 350,000 metric tons of annual production—declared force majeure, tightening global supply. These events, however, were overshadowed by macroeconomic headwinds.

Key Drivers of Copper’s Volatility

1. Trade Policy Uncertainty:
   The U.S. Section 232 investigation into copper imports, launched in February, created prolonged uncertainty. While a 90-day tariff pause temporarily stabilized prices, fears of a broader trade war persist. China’s retaliatory tariffs of 125% on U.S. goods further strained supply chains, reducing cross-border demand.

2. Regional Demand Disparities:
   While U.S. producer prices for grades 122 and 102 surged to $6.11/lb and $6.36/lb—driven by localized shortages—prices in Asia-Pacific markets like India and China rose modestly. Chinese copper wire prices climbed to $11,022/ton, but these gains were outweighed by broader weakness in export-driven manufacturing.

3. Macroeconomic Risks:
   Investors priced in the risk of a U.S. recession, which would depress demand for copper in construction and automotive sectors. The International Copper Study Group noted a 19,000-metric-ton global deficit in January 2025, but record inventories at LME and COMEX warehouses dampened bullish sentiment.

Outlook: Short-Term Pain, Long-Term Promise

Analysts project copper prices to stabilize near $4.33/lb by late Q2 2025, with potential recovery to $4.58/lb by year-end if trade tensions ease. However, risks remain elevated:
- Trade Policy: A prolonged Section 232 investigation could prolong uncertainty, while a full-scale tariff war would deepen demand destruction.
- Supply Constraints: Low treatment/refining charges and underinvestment in mining capacity may tighten supply over the long term.

Conclusion: Copper’s Long-Term Bull Case Remains Intact

Despite April’s selloff, copper’s fundamental narrative—anchored in electrification—remains robust. Fastmarkets projects a CAGR of 2.6% for copper consumption through 2034, driven by EVs, solar/wind infrastructure, and 5G networks. Even in the short term, the International Copper Study Group estimates 2.9% annual demand growth in 2025, assuming trade conflicts don’t escalate further.

Investors should treat the April dip as a buying opportunity for long-term positions, but remain cautious on near-term volatility. As Wang Zhe of Caixin Insight noted, “The copper market is pricing in geopolitical risks today but betting on green energy tomorrow.” With China’s manufacturing sector—and by extension, global demand—likely to stabilize by late 2025, copper’s rebound could be swift once policy clarity emerges.

For now, the metal’s path forward hinges on resolving trade disputes, managing supply bottlenecks, and navigating macroeconomic crosswinds. The data underscores a simple truth: copper’s fate is inextricably tied to the health of the world’s largest manufacturing economy.