Copper falls from four-week high as China’s manufacturing slows

Copper retreated from its highest close since early April after data showed a retreat in China’s factory activity, offering a sign of how trade conflict with the US is hitting Asia’s biggest economy.

The official manufacturing purchasing managers’ index dropped to 49 compared with 50.5 in March. That level was significantly weaker than economists expected, and means manufacturing switched from expansion — above 50 — to contraction as trade tensions spiked this month.

Copper had staged a strong rebound over the past couple of weeks on signs of a significantly tighter market, with China’s stockpiles plunging and import premiums surging. Analysts have attributed that to various factors, including a scrap shortage, a demand spurt from the country’s solar sector, and the knock-on effect of a rush to ship the metal to the US.

But they’ve also warned the bump could short-lived. Wednesday’s factory data shows how the high-stakes stand-off between Beijing and Washington over tariffs is already starting to bite Chinese factories and threatening prospects for commodities demand.

Copper fell 0.6% to $9,384 a ton by 10:55 a.m. Shanghai time, putting it on course for a loss of more than 3% in April after heavy losses at the start of the month. Aluminum and zinc also fell on the London Metal Exchange.

Meanwhile, China’s steel sector is still struggling, and iron ore futures in Singapore are poised for a third monthly decline. Prices dropped 0.4% to $98.10 a ton on Wednesday to be down 2.9% for April. Angang Steel Co., the nation’s second-biggest steelmaker, posted its 11th consecutive quarterly loss, although its loss was 67% smaller year-on-year.