Sharp Drop in Copper Prices Signals Growing Market Concerns
Copper prices tumbled below $9,000 a ton on Friday, marking the largest drop since March 2020, as fears over the escalating trade war between the U.S. and China led to a broad selloff in metals and mining stocks. The bellwether metal fell 6.3%, settling at $8,780 a ton in London, while the selloff accelerated across industrial metals markets. Copper traded on New York’s Comex also experienced sharp declines, on track for its biggest two-day loss since 2011. Nickel prices hit their lowest point since 2020, adding to the gloom in the sector.
China Retaliates with 34% Tariff on U.S. Imports
The market reaction came after China’s official Xinhua News Agency reported that Beijing would impose a 34% tariff on all imports from the U.S., effective April 10. This move significantly raised concerns over the global trade war, leading to a sharp pullback in major mining companies. Shares of companies like Freeport-McMoRan Inc. and Teck Resources Ltd. plunged by more than 10%, reflecting growing uncertainty in the metals market.
Shift in Focus: From Supply-Side Optimism to Demand Concerns
The latest drop marks a sharp reversal for copper traders, who had been previously focused on the bullish supply-side dynamics, driven by a push to ship copper to the U.S. before new levies are applied. However, with Trump’s sweeping trade barriers now fully in effect, market attention is quickly shifting toward the consequences for copper demand, not only in the U.S. but globally. As the trade war deepens, concerns are mounting about weaker global GDP growth and slower copper demand growth, which could delay the expected deficit in copper supply this year.
Market Analysts Adjust Copper Forecasts
Goldman Sachs Group Inc. acknowledged the growing challenges, saying, “While we remain structurally bullish copper in the long run, weaker global GDP and copper demand growth risk delaying the deficit we expect to see in the market this year.” These cautious remarks reflect the broader uncertainty that has gripped the market following the intensification of trade conflicts.
Broad Declines Across Metals and Mining Stocks
The declines weren’t limited to copper alone. Aluminum prices fell for the 12th consecutive day, while nickel slumped by 6.2%, reaching a settlement price of $14,758 a ton, the lowest since October 2020. Tin prices also plunged, erasing a weekly gain driven by fears of supply disruptions. With Chinese markets closed for a public holiday on Friday, the broader commodities market felt the weight of the escalating trade tensions, with further volatility expected as global markets continue to react to the ongoing trade war.
Conclusion: Ongoing Trade Tensions Add Pressure on Copper Prices
The steep drop in copper and other metals signals the mounting pressure from the ongoing U.S.-China trade war. While long-term copper demand remains structurally bullish, short-term market dynamics are shifting toward concerns over slowing global growth and trade disruptions. As the trade war continues to evolve, the metals market will remain highly sensitive to tariff announcements and their potential impact on demand and supply dynamics across industries.
