May 30, 2013 / 9:43 AM / 4 years ago

METALS-Copper up on China demand prospects, tighter supply

* Premiums for bonded copper in Shanghai as high as $150

* Worries linger that Fed may taper bond-buying programme

* Chilean copper production down 1.2 pct y-o-y in April

By Maytaal Angel and Silvia Antonioli

LONDON, May 30 (Reuters) - Copper rose almost 1 percent on Thursday as investors bet on improved imports by the biggest consumer China and as data from top producer Chile showed April output fell from a year earlier due to strikes and production problems.

Three-month copper on the London Metal Exchange closed at $7,320, almost 1 percent up, reversing Wednesday losses.

Lending copper some support, premiums for bonded copper in Shanghai were heard as high as $150 a tonne, according to China price provider SMM, a sign demand for delivery of the metals has improved.

Some of China's largest copper smelters have recently been forced to shut some units due to shortages of scrap, cutting copper output in the region.

"People are underestimating the pace of growth of demand in China; on the copper side of things we think demand is holding pretty well and the tightness in the scrap market in China is also quite notable," said analyst Dan Smith of Standard Chartered in London.

"On the other hand the data out of Chile also helped a bit today."

April copper production in Chile dropped by 1.2 percent from the same month a year before, due to strikes, production line problems and lower ore grades in some deposits, the Chilean government said.

Some Shanghai traders were said to be betting copper imports by China, which accounts for around 40 percent of world copper consumption, will pick up in May.

"The arbitrage between the LME and Shanghai (copper) did open up this week. I suspect we will see a bit more Chinese buying," said Citi analyst David Wilson.

But he added: "I think it's a tad artificial. Prices are not going anywhere because macro data in China is not showing any acceleration in activity."

Copper prices have fallen 9 percent so far this year on worries over less-than-stellar growth in China. They have been pegged for the past month between $7,100 and $7,500 a tonne.

INDONESIAN MINE

The U.S. job market and the economy as a whole may be strong enough in a few months' time to allow the Federal Reserve to pare its bond-buying a little, one of the central bank's most dovish policymakers said on Wednesday.

Uncertainty over the timing of any shift in policy left the dollar broadly weaker versus a currency basket, and versus the euro. A weak dollar makes dollar-priced metals cheaper for European and other non-U.S. investors.

Also propping up copper, workers at Freeport McMoRan Copper and Gold Inc Indonesia mine will not return to open pit mining until all investigations are completed into this month's deadly tunnel collapse, union official Virgo Solossa said on Thursday.

The global copper market has been keeping an eye on the closure at the world's second largest copper mine, which has helped underpin metal prices, but only a prolonged shutdown will hit world supplies, which are still seen in a small surplus this year.

In other metals, aluminium closed at $1,908 a tonne from $1,862 on Wednesday, while zinc ended at $1,912 from $1,884 and lead at $2,170 from $2,126. Tin closed at $21,100 from $21,050 and nickel finished at $14,800 from $14,820.

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