SHANGHAI, Jan. 16 (SMM) –Market rumors were spread in early US and European trading hours last Friday that credit rating agency Standard & Poor's (S&P) could downgrade a number of euro zone countries later the day, reigniting market concerns over the European debt crisis and compelling investors to close positions. Risk aversion therefore grew, and LME copper prices were pushed down to USD 7,879/mt from an intraday high of USD 8,116/mt. Nevertheless, the US later announced better-than-expected economic data, which helped LME copper prices edge up and return to early trading session's levels. LME copper prices, though, finally settled at USD 8,005/mt, a slight drop of USD 20/mt.

The US dollar tended to move higher this morning, leading Comex copper prices to experience a round of slides. Combined with market worries towards a downgrade to the euro zone countries, LME copper prices will be weighed down and drift lower. As such, SMM believes LME copper prices will fluctuate between USD 7,880 -7,980/mt during today's Asian trading hours. Chinese stock markets are expected to retreat further since US equities closed down last Friday, which will impose great pressures to SHFE copper prices. Hence, SHFE 1203 copper contract prices will move in the RMB 57,000-57,800/mt range. Spot copper discounts are estimated between negative RMB 200-50/mt versus SHFE 1202 copper contracts.