May 15, 2012 NEW YORK (Dow Jones)--Copper futures fell to a fresh four-month low Tuesday, weakening along with some growth-sensitive commodities as Greece's failure to form a coalition government spooked investors.
The most actively traded copper contract, for July delivery, fell 3.65 cents, or 1%, to settle at $3.5175 a pound on the Comex division of the New York Mercantile Exchange, the lowest settlement since Jan. 9.
"I think copper is going below $3.50," said Adam Klopfenstein, a market strategist with Archer Financial Services. "It's really tough for copper to rally with slowdowns in Europe as a result of austerity and China slowing down."
China and the euro zone are the two largest consumers of the industrial metal.
The European Union's statistics agency said that euro-zone gross domestic product was unchanged in the first quarter from the prior three months, as growth in Germany, Europe's economic powerhouse, was offset by contractions in Italy and Spain. The data were slightly better than expected but didn't change the view that copper demand from the currency union would slump.
Copper tends to react to shifts in the economic outlook because of its widespread uses in construction and general manufacturing. A financial crisis in Europe likely would limit the continent's already sluggish appetite for copper and could further limit demand worldwide by disrupting the flow of international trade.
The euro fell against the dollar, reaching the lowest level since mid-January and making copper futures appear more expensive for buyers using the common currency. Such moves can weigh on demand for dollar-denominated copper futures.
"Concerns over demand will continue to weigh on prices and for the likes of copper," said William Adams, head of research with metals research service FastMarkets. Given the recent steep selloff in copper, the market could be poised for a rebound, Adams added. "Bounces may follow, but we would expect them to be short-lived unless driven by encouraging news out of Europe," he said.
Tuesday marks the eighth time in the last 10 trading sessions that copper has settled lower, as investors shed growth-sensitive assets after contentious Greek elections renewed the prospect that the debt-laden country could exit the euro zone.
Greece's president on Tuesday admitted defeat in his talks with party leaders to form a coalition government and said the country will hold new elections.
Copper settlements (ranges include electronic and pit trading):
May $3.5220; down 3.50 cents; Range $3.5090-$3.5495
Jul $3.5175; down 3.65 cents; Range $3.5005-$3.5585