NEW YORK/LONDON, March 10 (Reuters) - Copper ended down for a second straight session on Thursday after surprisingly soft Chinese trade data underscored global growth concerns, already stinging from rising oil prices and geopolitical tensions.
China swung to a surprise trade deficit in February of $7.3 billion, its largest in seven years, as the Lunar New Year holiday dealt an unexpectedly sharp blow to exports.
Reinforcing the bearish tone in China, automobile sales rose just 2.6 percent in February from a year earlier, the slowest pace in 23 months.
"If demand does not materialize to the extent it was hopped for in this post mini oil shock world, then commodity markets are unlikely to be as tight as some commodity prices imply," said Bart Melek, vice president and director of commodities with TD Bank Financial Group, in a market comment.
London Metal Exchange (LME) copper for three-months delivery CMCU3 shed $84 to close at $9,191 a tonne.
COMEX May copper HGK1 settled down 1.50 cent at $4.1975 per lb.
The London and New York markets stand about 10 percent lower than record highs hit last April at $10,190 per tonne and $4.6575 per lb, respectively.
Data also showed a significant slowdown in imports, with inbound shipments of unwrought and semi-finished copper products off 35.4 percent from January.
Chinese imports of copper scrap amounted to only 250,000 tonnes in February, down 30.6 percent from the prior month, as consumers there continued to balk at higher U.S. prices.
"That data has fanned concerns in the market that a tightening in monetary policy in China is in danger of choking off copper demand growth," said Barclays Capital analyst Gayle Berry.
"I don't agree with that myself," Berry added. "I think it will result in a much slower growth rate this year for copper demand, but I think it will remain robust, but nevertheless with inflation concerns, high oil prices and geopolitical tensions, this has added fuel to the fire."
U.S. data added to the negative mood. New U.S. claims for unemployment benefits rose more than expected last week, but remained at levels suggesting a labour market recovery is intact.
"Industrial commodities for which demand depends on Chinese growth, the auto industry and American economy, will likely be under pressure for at least the short term," Melek said.
A stronger U.S. currency makes it more expensive for holders of other currencies to invest in dollar-priced commodities.
The dollar remained strong, after briefly paring gains against the euro following the jobless claims data, but that was outweighed by a cut to Spain's credit rating.
The higher dollar managed to push oil lower, but Brent crude futures climbed back into positive territory and U.S. crude prices pared losses after reports from Saudi Arabia said police had fired upon protesters. [O/R]
LACK OF DEMAND
The long-term outlook for copper remained positive due to a production deficit forecast for 2011, but demand for the metal in the spot market is sluggish.
Andrey Kryuchenkov, an analyst with VTB Capital, believed that lack of spot physical demand was being reflected in higher LME (copper) stocks and Asian inventories.
Although LME copper inventories fell 250 tonnes to 425,475 tonnes, they are still about 20 percent up from December 2010.
Copper's forward curve was in a $18.5 contango -- discount for cash over three-month material -- compared with a $70 backwardation -- premium for cash over three-month material -- in December. CMCU0-3
"The contango tells you that there is no spot demand," Kryuchenkov said.
Metal Prices at 1910 GMT
Metal Last Change Pct Move End 2010 Ytd Pct
COMEX Cu 419.80 -1.45 -0.34 444.70 -5.60
LME Alum 2586.00 5.00 +0.19 2470.00 4.70
LME Cu 9191.00 -84.00 -0.91 9600.00 -4.26
LME Lead 2430.00 -50.00 -2.02 2550.00 -4.71
LME Nickel 26050.00 -150.00 -0.57 24750.00 5.25
LME Tin 29300.00 -200.00 -0.68 26900.00 8.92
LME Zinc 2286.00 11.00 +0.48 2454.00 -6.85
SHFE Alu 16785.00 -40.00 -0.24 16840.00 -0.33
SHFE Cu* 69230.00 -2370.00 -3.31 71850.00 -3.65
SHFE Zin 17735.00 -580.00 -3.17 19475.00 -8.93