Copper futures decline amid oversupply concern

The most-traded copper contract for delivery in June declined 20 yuan ($3.21) on the Shanghai Futures Exchange Friday compared to Thursday, ending at 45,170 yuan per ton.

But it climbed 2 percent week-on-week. Trading volumes declined by 755,000 lots compared to Thursday's 1.6 million lots.

Friday's decline was mainly due to the weak outlook toward Chinese growth and lack of key market movers, according to a report Friday by London-based metal information provider Metal Bulletin.

Investors should still be cautious toward the copper market as the outlook both domestically and globally is pessimistic, according to a report from the Henan Province-based Futures Daily.

With the cooling of the housing market in the third- and fourth-tier cities, enthusiasm for real estate investment is also declining, Futures Daily said.

Buildings under construction partly support demand for copper, but the sluggish housing market will have a negative effect on copper demand in the future, the newspaper said.

In addition, according to a report Friday from Shanghai-based metal information provider Shanghai Metals Market, China's copper market will see a surplus of 400,000 tons in 2014 through a rise in copper production as imports surpass growth in real copper consumption.

Growing imports of copper are mostly financing demand, it said.

"As credit conditions are expected to stay tight this year, copper financing demand from the industry will remain robust, elevating imports," the report argued, citing copper analyst Zhu Wenjun.

Zhu predicted China's real consumption of refined copper will increase to 9.75 million tons this year, up 2.6 percent year-on-year.

The first-ever bond default case on the Chinese domestic market has caused concerns over the Chinese credit market, which will also affect the copper financing environment, Futures Daily said.

Shanghai Chaori Solar Energy Science and Technology Co announced in early March that it would fail to provide an interest payment to customers on time.