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London copper dropped below $7,000 for a second day on Friday and was on track for its biggest weekly decline since 2011, after global growth worries and a historic sell-off in gold turned investors away from commodities.
Shanghai copper pierced below the key 50,000 yuan mark for the first time since June 2010, and was facing a more than eight per cent weekly loss. But selling was confined to copper, with other metals contracts on both exchanges holding above recent lows, suggesting the broad scale of liquidation may be easing.
Three-month copper on the London Metal Exchange had fallen 1.64 per cent to $6,971.50 a tonne by 0718 GMT, having dropped as far as $6,875 a tonne earlier, towards a one-and-half year low of $6,800 hit the session before. Prices have lost almost six per cent so far this week and are now down by nearly 12 per cent on the year.
The most-traded August copper contract on the Shanghai Futures Exchange pared losses to close at 50,690 yuan a tonne, up 0.32 on the day, after closing limit down on Thursday.
"My feeling is that overseas investors are more pessimistic than Chinese companies. Despite the current depression of copper, there hasn't been a big change in fundamentals - the sell-off is macro related," said Chunlan Li, a Beijing-based analyst at metals consultancy CRU.
Li expects seasonal strength in Chinese demand to underpin prices in the near term, although she did not rule out a further drop in prices as the year unfolds. "In the second half we will see new mine supply coming on, so supply pressure is quite big -- that might add pressure to prices towards the end of the year," she said.
Reflecting souring sentiment towards commodities, investors in US-based funds pulled a record $2.7 billion out of commodities and precious metals funds in the latest week, data from Thomson Reuters Lipper service showed on Thursday. Base metals traders have been eyeing gold for direction after its historic slide over the past week. Base metal prices appear to be nearing a bottom although some fresh sales could be seen as traders rush to meet margins.
