International copper prices have fallen to their lowest level in nine months on the first trading day of 2025. With Chinese stocks struggling, market focus has shifted to the possibility of additional economic stimulus measures from Beijing.
Industry sources reported on Friday that copper prices on the London Metal Exchange (LME) initially surged over 1% in early trading on Thursday. However, prices later dropped 1.59% to $8,768 per ton, reflecting the weak performance of Chinese equities.
The CSI300 index, a benchmark for large-cap Chinese stocks, plummeted 2.9% after disappointing economic data was released. This marked the steepest single-day decline for the first trading session of the year since 2016.
Zinc and nickel prices also took a hit, and European markets opened lower, extending the bearish sentiment.
A particular note was the release of the Caixin Manufacturing Purchasing Managers’ Index (PMI) for December by Chinese financial information provider Caixin. The index came in at 50.5, missing both the previous month’s reading of 51.5 and the Reuters market forecast of 51.7, raising concerns about China’s economic recovery.
Based on corporate purchasing manager surveys, the PMI serves as a key indicator of economic trends. A reading above 50 signals expansion, while below 50 indicates contraction.
As a result, investors turned bearish. The copper market depends on the recovery of China’s real estate sector and potential global trade frictions following Donald Trump’s inauguration.
Chinese authorities have announced plans to stimulate economic growth this year by increasing public sector borrowing and spending and adopting monetary easing policies.
In his Tuesday New Year’s Eve address, Chinese President Xi Jinping emphasized China’s progress in meeting its official 5% growth target for 2024, stating that the economy remains broadly stable.
However, Xi acknowledged new challenges from the external environment and signaled a strong commitment to proactive economic recovery policies.
ING commodities strategist Ewa Manthey commented, “Investors are waiting to see if and when Chinese support measures will feed their way into metals markets in the form of stronger demand.”
She added that tariff policies under a potential second Trump administration could lead to more aggressive stimulus from China, possibly providing a floor for copper prices this year.
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