SINGAPORE: Shanghai copper futures fell for a fourth straight day on Friday and were set to post their weakest month since October amid weaker demand from top consumer China and headwinds from troubled economies in the euro zone.
Shanghai copper is also on course for its worst quarter since April-June 2012, tracking its counterpart in London which closed out the first quarter with a near 5 percent loss.
The London Metal Exchange is shut on Friday and Monday for Easter holidays, thinning trading activity in Shanghai.
The most-traded copper contract for July delivery on the Shanghai Futures Exchange dropped half a percent to 55,260 yuan ($8,900) a tonne by the midday break.
For the month, the contract is down 4.3 percent and has lost 4.9 percent for the quarter.
Improving premiums for copper stocks at bonded warehouses in Shanghai suggest demand may pick up during the seasonally stronger second quarter. Premiums rose to $70-$85 a tonne this week from around $55 a month ago, traders said.
"When China does choose to restock and step back into the copper market, premia and prices will rally strongly and the market will likely tighten up much more quickly than many anticipate," Standard Bank analyst Leon Westgate said in a note.
But Westgate believes that a significant pickup-up in Chinese demand may only emerge towards the end of the third quarter.
"This assumes of course that the oft-cited wall of new copper production fails to arrive, or is indeed siphoned off into a warehouse somewhere," said Westgate who sees copper supply outpacing demand by a modest 150,000 tonnes this year.
In Europe, copper premiums rose to as much as $100 a tonne over the LME cash price from as low as $50 in February amid increased competition from warehouses to mop up spare metal in the market.
Three-month LME copper hit a one-week low of $7,522 a tonne on Thursday and ended March with a loss of 3.5 percent on worries over the fallout from a rescue deal for Cyprus and the lack of a government in Italy after inconclusive elections.