RTRS: METALS-London copper falls 2.5 pct on economic woes
London copper futures fell over 2 percent on Thursday, hurt by a bleak outlook for the global economy, while Shanghai prices steadied after a four-day losing streak.
The International Monetary Fund said on Wednesday the global economy would likely shrink by 1.3 percent this year in the deepest recession since World War Two, and forecast growth of just 1.9 percent next year. [ID:nN21500818]
"The IMF report was probably a reminder that internationally, economies still face a difficult period ahead of them," said David Moore, commodity strategist at Commonwealth Bank of Australia.
"And since metals have rallied a fair way from their recent lows, some are coming back a little bit."
Shanghai copper for July delivery fell as low as 35,750 yuan ($5,234) a tonne, its weakest since April 8. By 0331 GMT it stood at 36,350 yuan, off just 0.1 percent from Wednesday's close, while the most active August contract shed 0.6 percent.
Three-month copper on the London Metal Exchange fell $115 to $4,425 per tonne.
Even with the correction, copper prices are still up over 44 percent in London and more than 52 percent in Shanghai year-to-date, thanks largely to Chinese buying.
China's stockpiling had driven copper prices to six-month tops last week but traders say Beijing's State Reserves Bureau (SRB) may be done buying for now, having breached its target volume and given the current price levels.
"We heard that the SRB is planning to sell 50,000 tonnes of copper but it's not clear how much it has already sold," said a Shanghai-based trader.
"I guess it wants to take advantage of the recent rallies and will buy back at lower prices," he said.
China's state commodity buyer is thought to have contracted to purchase around 300,000 tonnes of copper cathode in the first three months of 2009.
But the tight availability of copper scrap should continue to support copper prices until the second quarter, said Macquarie analyst Bonnie Liu.
"I heard that the March delivery by a supplier to SRB has been deferred due to the higher prices on the spot market so that will support Chinese imports in the second quarter," added Liu.
