Copper futures unlikely to revert to record prices from February

New concerns about the sovereign debt crisis tearing through the euro zone drew down copper futures on Tuesday as raw material demand slipped with optimism about prospects of the global economic recovery, according to Bloomberg.

Forex pros reports the industrial metal dropped in value on Monday, which was a federal holiday in the U.S. Following trading considered comparatively sparse, the red metal dropped to its lowest price in one week.

The jobs report from Friday, which indicated minimal economic growth during the month of August, weighed heavily over copper futures during the extended weekend. The jobs reports, issued by the U.S. Department of Labor, held the weakest results since September 2010.

The life and times of copper runs closely with and is sensitive to economic data, reports and announcements since the industrial metal has numerous uses.

"Copper futures are highly sensitive to economic data as the red metal is used in everything from iPods and cars to household plumbing, and demand for such goods wanes when the economy falters," President Paul Ash of the Australian Technical Analysts Association told the Sydney Morning Herald. "Copper still seems to be suffering from the threat of a US and European slowdown."

At 9:23 a.m. on Tuesday, copper futures fell 2.02 percent, an 8.35 cent slip to $4.041 per pound.

In addition to questions about the debt crisis reducing demand for copper, questions also are rising in regard to supply disruptions. Further, geopolitical drivers are playing a role in the copper market

Reuters reports two copper mines owned by Freeport McMoRan will endure a labor dispute that will result in strikes.

"On the supply side, there are constraints from labor action," analyst Ong Yiling of Phillip Futures told Reuters.

Workers at the Grasberg mine in Indonesia are preparing to strike from September 15 to October 15 but would call back the protest if the owners comply with the demand for a pay raise, according to Reuters.

Workers at the Cerro Verde copper mine in Peru are set to institute a 48-hour demonstration beginning on Wednesday as a method of pushing for a salary increase, union representatives told Reuters.

But the source of grave concerns for the industrial metal's immediate market performance is the economic picture.

German, Finnish and Dutch finance ministers are slated to convene on Tuesday to talk about the demand by Finland for collateral in the Greek bailout. Lawmakers in Italy are planning to discuss an austerity plan as the country has shown up on the radar for concerns germane to the sovereign debt crisis.

Services in China dropped during the month of August, which also impacts copper futures since China hosts the globe's second-largest economy yet the most rapidly developing financial system. The globe's top economy is that of the United States, but news from the Labor Department from Friday weighed heavily.

"The economic outlook is really weak," metals research head David Thurtell with Citigroup told Bloomberg. "There’s not a lot to be bullish about base metals in the near term."

Thus far this year, copper has performed strongly. The industrial metal touched record prices during the first week of February, which the Sunday Morning Herald attributes to lows generated by two financial crises: one that ran through January 2010 and the second that ran from June 2010 through this fast February.

Ash, the Technical Analysis Association president, said the future of copper might be reflected – if not obstructed – by the metal's poor performance.

"Futures experts are saying that the weak prices are clouding the long-term outlook for copper demand and reducing the likelihood copper will make new highs this year,'' Ash told the Sunday Morning Herald.