LONDON, Mar 15, 2011 (Dow Jones Commodities News via Comtex) -- Copper price volatility is likely to remain high as market participants attempt to weigh up geopolitical risks, macroeconomic developments and fundamental factors, Aurubis AG (NDA.XE) said Tuesday.

Aurubis, Europe's largest copper producer, said the impact of the Japanese earthquake in particular is yet to be understood as fears over the nuclear crisis at the country's Fukushima Daiichi nuclear plant continue to escalate.

"In their short-term market assessments, analysts and investors may continue to be torn between macroeconomic and geopolitical risk factors, currency fluctuations and the fundamental hard facts. The price volatility seen in the past weeks will therefore likely persist unabated," Aurubis said.

The London Metal Exchange's three-month copper contract tumbled Tuesday as heavy losses in equities weighed on commodity markets, driving the metal to a three-month low of $8,944.50 a metric ton.

Aurubis said record highs above $10,000/ton earlier this year had "brought about opposition," with many traders calling the market's rally as overdone. The producer said it remains to be seen whether the correction back down to the $9,000/ton level will revive physical buying interest for copper cathodes.

However, the "demand is there and the fundamentally stable perspectives for the copper market remain intact," it said.

Aurubis said that while the market is expecting increased copper demand because of reconstruction efforts in Japan in the medium and long term, "on the other hand production disruptions may have an adverse effect on cathode exports and thus reduce Japan's contribution to the world market supply."

The company suggested Japanese copper smelters could be affected by power rationing, which could cause them to scale back operations to the minimum necessary for operation "or, in extreme cases, to even discontinue them completely." Mitsubishi Materials Corp., the third-largest copper maker in Japan, already said it has suspended operations at its Onahama smelter due to a power outage.

Aurubis said, though, that "currently, no-one can foresee the concrete effects that the earthquake, the tsunami and the nuclear crisis will have on Japan, its people and its economy."