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If the holder's current species is Ditto, Defense and Special Defense is raised by 50%. The boosts are lost when Ditto uses Transform.
An item that can only be used on Ditto, Metal Powder is particularly good on that certain Pokemon. Ditto needs time to use Transform, and Metal Powder may help it buy that time by boosting its defenses to respectable levels. However, Ditto is such a, let's face it, awful Pokemon, that Metal Powder should not really be seen in any tier bar NU. Ditto's defenses are still rather mediocre, and perhaps other items such as Leftovers should be used on Ditto, and that's only if you're going to use it.