Iron ore falls as China PMI slips to lowest level since 2022

Iron ore and base metals dropped on concerns about China’s economic outlook, with the country’s manufacturing activity falling to its lowest level in more than two years.

Futures for the steelmaking raw material declined after Caixin’s private manufacturing purchasing managers’ index for May dropped to a reading of 48.3 from 50.4 in April — the lowest since September 2022 and well below the 50 mark separating expansion from contraction.

The drop came as a surprise since economists had expected a median reading of 50.7, and the official PMI numbers released on Saturday were stronger.

The survey, which is more export-oriented, gives an indication on how factories in China have dealt with the trade truce with the US over the past month. With tensions rising again, traders will become cautious.

Iron ore futures in Singapore fell as much as 1.5% to $93.85 a ton, before trading at $93.90 at 10:34 a.m. local time. Yuan-priced futures on the Dalian exchange and Shanghai steel contracts dipped.

Copper on the London Metal Exchange fell 0.5% after closing at the highest level since April 2 on Monday. Aluminium dropped 0.9%, while zinc declined 1%.