Copper prices extended losses to fresh two-week lows on Wednesday as worries about the impact of political turmoil in Greece and the euro zone debt crisis sapped demand for risky assets and raised fears about the demand outlook for metals. Benchmark copper on the London Metal Exchange (LME) fell to $8,040 a tonne at 0922 GMT, down 0.7 percent from Tuesday’s close of $8,095. It earlier hit its lowest level since April 24 at $8,035 a tonne. In Greece, radical leftist Alexis Tsipras meets the leaders of mainstream parties on Wednesday, with little chance of clinching a deal on a coalition government after he set tearing up an EU/IMF bailout deal as a condition.
The political uncertainty pushed the euro close to a recent three-month low against the dollar in a move that put pressure on commodities priced in the U.S. unit. “It (the situation in Greece) has made the market concerned about sovereign debt issues again and whether or not there will be a reversal of the fiscal austerity measures that had been put in place. That is acting as a weight on base metals prices in the short term,” said Gayle Berry, analyst at Barclays Capital. “But when you look at the fundamental backdrop for the metals it is hard to see too much downside. For copper when you start getting into the mid 7,000 level you would see some buying interest coming in at those levels.
“Copper has fallen about 8 percent from this year’s peak of $8,765 reached in February amid a shaky global economy, with top copper consumer China possibly the only hope for a recovery in prices. “I am a little bearish as the euro has been pointing down and copper has slowly drifted with it. I think copper may go lower, especially if the euro nears 1.2950,” an LME trader said Analysts are looking towards a raft of Chinese data this week that is expected to show the world’s No. 2 economy has bottomed out as inflation slows and output picks up.