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Copper's 'fall out of bed' underscores China woes

Copper prices fell to their lowest level in four years on the Shanghai Futures Exchange on Monday, after tanking 5 percent, a move which analysts say underscores China's bleak outlook following weak data and the country's first ever corporate debt default.

(Read More: What that China debt default means to the market)

The most heavily traded copper futures contract on the Shanghai Futures Exchange fell 5 percent - its daily limit - to 46,670 yuan ($7618) a tonne.

The move followed a steep fall in the price of copper futures on the Comex division of the New York Mercantile Exchange on Friday. May futures tumbled 4.2 percent to $3.0825 a pound, the heftiest one-day drop since December 2011, and the lowest level since July.

Analysts closely watch copper prices as a barometer for global risk appetite, as it is sensitive to macro-economic developments.

(Read More: Copper's swoon- Bad omen for China?)

"I am a little bit concerned by it [copper's fall]," Jonathan Barratt, chief investment officer at Ayers Alliance, told CNBC Asia's Squawk Box on Monday.

"The [China] data wasn't that impressive, and when you combine that with [last week's bond] default, it presents a weak picture in terms of demand and ongoing ripples that that will cause. So copper did fall out of bed, which I think was something that was expected," he added.

Copper contracts for delivery May 14, on the Commodities Exchange Centre (CEC), over the past five days.

Copper's swoon comes against a backdrop of worry about slowing Chinese demand, which has seen prices slump 9.2 percent year to date. China, the world's largest copper importer, accounts for around 40 percent of global demand.

(Read More: Several reasons why commodities prices could fall soon)

According to the Shanghai Futures Exchange, copper stockpiles increased for an eighth straight week last week, their longest rising streak in two years.

"Any kind of weakness in demand is going to highlight the fact that the market is potentially reaching a tipping point between supply and demand," said Ric Spooner, chief market analyst for CMC Markets in Australia.

"Broadly speaking, leaving out the global financial crisis, a shortage of copper caused by the growth of China has kept prices strong. Now as copper production is growing faster than demand, the market's slight deficit could turn into a slight surplus - which will have a big impact on prices," he said, adding that in his view copper's fair value sits between $2.75 and $3 a pound.

"Copper prices normally see strong technical support at $3, if we break below that it could move lower," Spooner added.

Dorling Kindersley | Vetta | Getty Images

Official data released over the weekend showed China moved into a trade deficit for the first time in 11 months after exports fell 18.1 percent on year in February, provoking concern over the health of the world's second largest economy.

(Read More: China Feb exports tumble amid global uncertainty)

Adding to the pain was benign inflation data showing consumer prices rose 2 percent in February, the slowest rate in 13 months. News last week of China's first corporate bond default in at least 17 years delivered another hefty blow.

(Read More: China inflation tame, room for policy easing)

— By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie

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