METALS-Copper falls on stocks worry, China imports eyed

* Copper falls 3 percent in London, 2.6 pct in Shanghai

* Shanghai at discount to LME

* Previous sustained discount at end-08

* Lead hits 2-month high

By Nick Trevethan

SINGAPORE, March 9 (Reuters) - Shanghai copper fell on
Monday, reversing an early rise and snapping four days of
gains, as worries about rising stocks in China and the slowing
pace of deliveries from London weighed on sentiment.

London Metal Exchange copper stocks fell 3,175 tonnes to
522,025 on Friday, continuing the past week's trend. <MCU/STX>

But the level of cancelled warrants -- metal tagged to
leave LME stores -- fell to 10 percent of the total stock, from
12 percent on Thursday, suggesting the pace of deliveries may
slow.

And an unexpected rise in Shanghai stocks, up more than
10,000 tonnes to 38,468 tonnes or more than a third last week,
is also worrying some traders.

"The rise came as something of a surprise. Everyone knows
material is headed for Shanghai, but premiums in the physical
market were firm last week," a dealer in Shanghai said.

"Maybe merchants were forced to give up that premium and
delivered to the exchange because they didn't have any physical
customers. That suggests people are delivering against the
March contract and we should see another rise this week,
especially if premiums ease."

Shanghai copper for delivery in May SCFc3 fell 770 yuan
to 29,020 yuan by the close, reversing an earlier half a
percent rise. Last week it touched 30,600 yuan, the strongest
in four months.

Copper on the London Metal Exchange MCU3 fell $113 to
$3,610 or 3 percent, and the decline in London flipped the
premium for Shanghai copper to a discount.

Shanghai metal traded at a discount of 33 yuan to the price
in London, including China's 17 percent VAT, versus a premium
of 619 yuan on Friday. Since early January Shanghai has
maintained a premium of 400 to 1,000 yuan to the international
market.

"Shanghai copper is correcting after the multi-month high
reached last week," said Jane Jiang, an analyst at Shanghai
Nonferrous Metals Industry Association.

"The spot market is softer -- prices met tough resistance
above 30,000 yuan, but the demand is not weak as expected. Many
consumers are willing to build stockpiles at prices below
29,000 yuan," she said.

In the West, investors are trimming bullish views across
commodity markets. The net long position in U.S. commodities
fell by nearly a third over the last two weeks, data released
on Friday showed. [ID:nN06420944]

But analysts warned about reading too much into the data.

"More surprising than the CFTC numbers is the resilience we
are seeing in LME metals, especially copper. Even today after
the weak macro economic news in the past week," said David
Moore, Commodities strategist at Commonwealth Bank in Sydney.

"The big question for copper remains the strength of
Chinese demand. Wednesday should see China's import data and
expectations are for a relatively strong number." Friday's
non-farm payrolls report from the United States showed the
world's largest economy shed 651,000 jobs in February, just
above expectations, pushing the jobless rate up to its highest
in a quarter of a century.

Analysts and traders are looking for the refined copper
component of the data to surpass December's record of 211,527
tonnes. [ID:nHKG178979]

Lead MPB3 rose almost 1 percent to $1,225, and hit $1,229
in electronic dealing, its highest since Jan 7.

"Prices jumped $30 in the space of abou 12 minutes. The
price moved in very small volume, one or two lots at a time.
Technically, lead looks quite strong and I suspect when London
woke up they put a couple of orders through." a dealer in
Sydney said.

Other metals ticked lower.

Zinc MZN3 and nickel MNI3 both fell around 1.5 percent
to $1,208 and $9,700 respectively.

Moore said room remained for further falls given the weak
macroeconomic environment and falling cost curves as high cost
productions shuts.

But he added: "Aluminium, nickel and zinc have all seen
forced production adjustments but the scope for further big
falls is more limited."
Base metals prices at 0714 GMT
Metal Last Change Pct Move End 2008 Pct chg
09
LME Cu 3610.00 -113.00 -3.04 3060.00
17.97
SHFE Cu* 29020.00 -770.00 -2.58 23840.00
21.73
LME Alum 1305.00 -5.00 -0.38 1535.00
-14.98
SHFE Alum* 11555.00 -185.00 -1.58 11540.00
0.13
COMEX Cu** 163.25 -4.80 -2.86 139.50
17.03
LME Zinc 1208.00 -22.00 -1.79 1208.00
0.00
SHFE Zinc 10465.00 -220.00 -2.06 10120.00
3.41
LME Nickel 9700.00 -150.00 -1.52 11700.00
-17.09
LME Lead 1225.00 10.00 +0.82 999.00
22.62
LME Tin 11100.00 -220.00 -1.94 10700.00
3.74
LME/Shanghai arb^ 33
Dollar/yuan 6.8407 \ 6.8417
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
(Additional reporting by Alfred Cang in Shanghai; Editing by
Ben Tan)