Shanghai copper prices drop amid heavy sell-off

Shanghai Futures Exchange (SHFE) prices further declined on Friday under increased selling pressure.

Copper prices dropped mainly because the general market sentiment weakened and a large amount of commodities were sold off, according to a report by London-based metal information portal Metal Bulletin on Friday.

The most-traded copper contract for December ended at 46,750 yuan ($7,601) per ton on the SHFE on Friday, down 680 yuan or 1.43 percent from Thursday.

The copper price was down 490 yuan or 1.04 percent from the previous Friday.

The trading volume climbed 38,348 lots on Friday from Thursday's 501,988 lots.

Copper futures kicked off at a high level last week due to China's better-than-expected trade data for September, which partially offset investors' concerns over the slowing demand in the country, according to a report from Reuters on last Tuesday.

China imported 390,000 tons of copper products in September, up 14.7 percent month-on-month, according to the data released by the General Administration of Customs of China on October 13.

The expanding domestic smelting capacity and rising processing fees are two major reasons stimulating the copper imports, according to a report from Guangzhou-based Huatai Great Wall Futures Co (HGWF) last Thursday.

The copper demand in China is still not strong enough to support an upturn in the copper market, the report from HGWF said. With worsening economic data, copper prices declined further last week.

Chinese companies are expected to cut capital spending by about 7 percent this year, which is the largest annual reduction after the global financial crisis in 2008, which further weakens the market sentiment, a report from Reuters said on last Thursday.

In a short term, investors should be more cautious about the copper market as bearish outllok of the copper industry will further weigh on the copper prices, according to the report from HGWF.