Copper slipped to a one-week low on Monday as concerns about demand in China and a sharp rise in oil prices prompted market participants to reduce bullish positions.
Benchmark copper on the London Metal Exchange was down 0.7% at $13,465 a metric ton as of 0938 GMT, after earlier touching $13,394.5 a ton. The metal has retreated about 5% from the 3-1/2-month peak of $14,196.50 reached last week.
Market participants said that softer-than-expected economic data from China - a key destination for industrial metals - led funds and traders to unwind long positions. Chinese industrial production expanded by 4.1% in April compared with the same month a year earlier, a slowdown from March's 5.7% growth. The April outcome fell short of the Reuters poll forecast of 5.9% and represented the slowest pace of expansion since July 2023.
At the same time, Brent crude futures climbed more than 1% to trade above $110 a barrel. The rise in oil followed an attack on a nuclear power plant in the United Arab Emirates and the stalling of efforts to end the U.S.-Israeli war on Iran, developments that contributed to heightened energy market tensions.
The combination of weakening industrial data in China and a higher oil price environment drove a reassessment of near-term demand and cost pressures for copper users and investors. Funds and trading desks responded by paring back long exposure, a move that coincided with the metal's pullback from last week's multi-month highs.
Market context and immediate dynamics
The price moves reflected two concurrent forces noted by participants: a demand-side shock from China's lower-than-expected industrial output figures, and an oil-driven supply-cost and geopolitical risk channel that lifted crude prices above $110 a barrel. Both factors contributed to downward pressure on copper as traders adjusted positioning.
Where the effects are felt
- Metals trading and investment flows, where the unwind of long positions triggered price declines.
- Industrial and manufacturing sectors, which are sensitive to Chinese consumption trends and input costs.
- Energy markets, where the rise in Brent futures reflects heightened geopolitical risk.
Information in this article is drawn from market reports and price data provided at the time of writing.