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Highlights
- Copper and iron ore dip amid China’s slowing industrial activity
- Gold and ASX200 stay under pressure from weak global signals
- Key miners lose ground as material sector lags
Commodity markets are under pressure as weaker-than-expected Chinese factory activity and steel sector performance ripple through global supply chains. April data pointing to a deceleration in China’s manufacturing has triggered notable declines in copper and iron ore prices, with implications also filtering through to equity markets.
Copper Faces Tight Market Despite Drop
Copper prices on the London Metal Exchange fell 3.34% to US$9,125 (AU$14,232) per tonne as of 1 May. While the price slump reflects demand concerns, particularly from China's industrial slowdown, the underlying market remains tight.
The Yangshan copper premium—a key indicator of Chinese demand—has surged nearly threefold over the past three months to US$94 per tonne. Additionally, inventories have dropped significantly, with a sharp 24% fall reported by the Shanghai Futures Exchange, marking the lowest seasonal level since 2022. A trading house even described the current squeeze as one of the “greatest tightening shocks in history,” amid looming concerns of fresh US tariffs.
Iron Ore Slides Amid Steel Industry Losses
Iron ore prices were marginally lower, easing 0.1% to US$99.76 per tonne. However, the broader trend remains downbeat, with the commodity logging its third consecutive monthly loss. The slump is closely tied to persistent struggles in China’s steel sector, as Angang Steel, the country’s second-largest producer, reported its 11th straight quarterly loss.
Amid economic uncertainty, reports suggest several mills are now preparing to curtail production—adding further pressure to already sluggish demand.
Gold and Equity Markets React to Global Signals
Gold prices also eased, slipping 0.4% to AU$3,260 per ounce following signs of economic contraction in the US. This marks the first such contraction since 2022, with softer consumer spending and a surge in imports ahead of anticipated tariffs contributing to the decline.
The ASX200 index opened flat, dipping just 6.2 points to 8,120 by mid-morning. Over the past five days, the benchmark has gained 1.91%, although it remains largely unchanged year to date. Performance across sectors was mixed—materials declined by 0.92%, while utilities and industrials saw modest gains of 0.24% and 0.23%, respectively.
Miners Take a Hit
The materials sector downturn weighed on several prominent miners. Regis Resources (ASX:RRL) fell 3.33% to AU$4.36, Liontown Resources (ASX:LTR) slid 2.86% to AU$0.51, and Nickel Industries (ASX:NIC) dropped 2.66% to AU$0.55.
For investors seeking alternative exposure during such volatile times, ASX dividend stocks may present a potential buffer, offering income stability amid market uncertainty.
As global and domestic economic cues continue to unfold, all eyes remain on China’s industrial recovery trajectory and its cascading impact across commodities and equity markets.
