SHANGHAI, Oct. 12 (SMM) – LME copper prices posted strong performance Thursday as investors expected that a downgrade of Standard & Poor's (S&P) on Spain's credit rating would compel the country to seek for rescue. Besides, the euro rallied from earlier lows owing to short covering, which help commodity markets rebound. Later, the US Labor Department announced that the initial jobless claims fell significantly in the week ending October 6, down by 30,000 to 339,000, well below 370,000 anticipated by markets. The positive US data boosted copper prices further and also provide rising momentum for equity markets. Some investors felt relieved on signs of improvement in the US labor market and sold off short positions built three trading days ago. As a result, LME copper prices touched as high as USD 8,283/mt but then retreated slightly owing to technical resistance, narrowing daily gains before finally ending at USD 8,222/mt, still up USD 62/mt.
Greece made smooth negotiations with three international teams and said they would probably reach consensus before the EU summit in mid-October, which may further lift the euro higher. Despite restrictions between recent two moving averages, LME copper prices will still move at the highs between USD 8,190 -8,280/mt during Friday's Asian trading session. The Shanghai Composite Index will test support at 2,100. SHFE copper prices will start higher before lurching narrowly, while SHFE 1301 copper contract will hover in the RMB 58,900-59,700/mt range. In spot markets, as SHFE copper prices rebound, copper discounts will expand. But cargo-holders will insist on firm prices before the delivery for SHFE 1201 copper contracts, which will cap copper discounts between negative RMB 20-180/mt.