FX.co ★ Copper Extends Plunge

Copper futures fell to $4.55 per pound on Wednesday, retreating from a recent four-week peak of $4.90 earlier in the week. This decline was propelled by diminishing demand and a robust supply, further exacerbated by the withdrawal of arbitrage traders in China. The National Bureau of Statistics' manufacturing PMI in China unexpectedly dropped to a 16-month low as export orders took their steepest dive since 2022. This downturn reflects the hesitation among US consumers to sustain supply chains following President Trump's recent hike in tariffs on Chinese goods, which rose to 145% on top of previous duties. For Chinese manufacturers and copper producers, exports had been a critical outlet due to weak domestic demand, driving them to focus on foreign markets. Meanwhile, an abundant ore output from South America has further contributed to a backdrop of oversupply, leading the International Copper Study Group to double its forecast for this year's surplus, nearing 300,000 tonnes. As a result, the heightened risk of a surplus prompted Chinese traders to unwind their long positions on US copper futures, mostly established after Trump's announcement of an inquiry into potential tariffs on copper imports.