Why are metal prices falling?

In recent weeks we have seen a sharp drop in prices. The copper price fell as much as €350 per mt. (=1000 kg) in a short time at the end of April. The reason for this was a number of large investors relinquishing their (stock market) positions in copper.

Soon after, negative reports emerged about the U.S.-China trade war. Due to difficult negotiations, the U.S. decided to further increase import tariffs on a large package of goods. In addition, worse figures came out of China, regarding auto sales and domestic production. All this caused a drop in prices for all metals; besides copper, zinc and lead were also big losers. Compared to the peak in 2018, the copper price on the LME is now about €700 lower, the price for lead is about €500 per mt. lower.

China has imposed an import ban on brass. Sales for this material have now shifted to countries within Europe, and some Asian countries such as India and Pakistan. But these do not have sufficient capacity to handle the sharply increased supply. So here, too, a big drop in yields.

In the last quarter, demand for aluminum in India fell by more than 40%. This is mainly due to disappointing car sales. In the European market, the same is happening, factories have large stocks of material, and demand is disappointing.