METALS-Recession fears set copper on track for biggest daily fall since COVID-19 outbreak

By Polina Devitt

LONDON, April 4 (Reuters) - Base metals saw a sharp sell-off on Friday, with copper on track for its biggest daily slide since the early days of the 2020 COVID-19 pandemic, as U.S. President Donald Trump's sweeping tariff plans sparked recession fears.

Benchmark three-month copper CMCU3 on the London Metal Exchange (LME) was down 6.4% at $8,764 per metric ton by 1612 GMT, after earlier hitting $8,734, its lowest since August 8.

Over the last 15 years, copper, used in power and construction, saw a bigger daily fall only in March 2020, when the world grounded flights to curb the spread of the coronavirus, and in October 2011, during the Eurozone debt crisis.

"Growth-dependent metals have a bit of a disaster at the moment, with fears that tariffs would cause recession," said Dan Smith, head of research at Amalgamated Metal Trading.

On Wednesday Trump announced Washington's steepest trade barriers in more than 100 years, with the higher rates to be launched on April 9. Top metals consumer China hit back on Friday with additional 34% tariffs on all U.S. goods from April 10 and export restrictions on some rare earths from April 4.

"Confidence has been damaged badly, and it is not something you can undo quickly," Smith said. JPMorgan now sees a 60% chance of the global economy entering recession by year-end, up from 40% previously.

Federal Reserve Chairman Jerome Powell said on Friday the Fed does not "make a probability forecast of how likely it is for there to be a recession, but many outside forecasters do and many of them have raised the likelihood, albeit from very low levels."

On Monday, China's financial markets will resume trading, they were closed on Friday for a public holiday.

For copper, Comex futures HGc1 reduced their premium over the LME benchmark LMECMXCUc3 sharply from last week's peak, easing stimulus to continue shipping the metal to Comex stocks HG-STX-Comex and removing part of the support for both contracts. The U.S. continues a probe on possible new copper tariffs.

LME aluminium CMAL3, already subject to a 25% U.S. import tariff, was last down 2.9% at $2,378 a ton, after hitting $2,370, its lowest since September 11. The contract has been falling for 12 sessions.

Prices for alumina, a raw material to make aluminium, in China SAOc1 slid 46% so far in 2025, reducing production costs of aluminium smelters.

Potential support for aluminium could come from China if the country's output growth reaches the ceiling of the official smelting capacity cap.

"This cap in theory limits supply growth, which would be bullish, but imports to China have been weak recently indicating relatively weak demand," Smith said.

Tin CMSN3 fell 5.5% to $35,210. However, the premium of the LME cash over the three-month tin contract CMSN0-3 was last at $254 compared with a discount of $193 a month ago, indicating worries about nearby supply from Malaysia, Myanmar and Congo.

Zinc CMZN3 lost 1.9% to $2,661, while lead CMPB3 fell 2.5% to $1,905.50 and nickel CMNI3 slid 6.4% to $14,720 after hitting $14,595, lowest since October 2020.

Zinc hit an eight-month low, lead - lowest since October 2022.

The percentage fall in all the base metals remained within a single digit, away from the LME's limits for daily price change which are 12% for copper, aluminium and 15% for the rest of the group.

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