June 16, 2008 / 11:05 AM / 12 years ago

CORRECTED - UPDATE 4-LME copper up 1 percent, cash premium rises

 (Corrects options declarations day to first Wednesday of each
month in paragraph six) 
 (Updates to LME mid-session)
 By Daniel Magnowski
 LONDON, June 16 (Reuters) - Industrial metal copper rose
more than 1 percent in London on Monday, while the premium for
metal for nearby delivery rose ahead of a key trading day.
 Three-months futures in the metal MCU3, often considered a
good gauge of underlying economic activity, traded up to $8,084
per tonne before ending the official open outcry session on the
London Metal Exchange up $65 at $8,045.
 "Overall, the complex is looking quite supportive as we go
into this week," analyst Nick Moore at ABN Amro said.
 The premium for copper for immediate delivery over metal for
delivery in three months MCU0-3, often used as an indicator of
how tightly-supplied markets are, rose to around $200 per tonne
from $130 at the start of the month.
 Traders were attempting to exit short positions they had
built up in the expectation that prices would fall, analysts
 "The backwardation is flying up, but I think it's a
technical move ahead of Third Wednesday," Moore said, referring
to options declaration day, which falls on the first Wednesday
of each month.
 Copper, though well below the peak it touched earlier this
year, is still up 19 percent for the year so far, making it one
of the better-performing assets on financial markets.
 "We still consider copper as on the expensive side even
after the decline from the all-time high of $8880/t, yet limited
and tight inventories make it very hard (and expensive) to short
the metal," analyst John Reade at UBS said in a report.
 Production of refined copper in China, the world's biggest
user of the metal, rose 18.3 percent in May to 323,800 tonnes,
while aluminium output rose 21.3 percent to 1.16 million tonnes,
data showed on Monday. [ID:nPEK248392]
 Still, the rise has not been enough to totally offset the 25
percent decline in copper imports, according to interim data,
forcing buyers to raid Shanghai warehouses for metal.
 Lead MPB3, which fell steeply last week on account of high
stock levels, was down a further $30 at $1,745 per tonne.
 "It reminds people that certain commodities are
uncomfortably in surplus," ABN's Moore said.
 Aluminium MAL3 was up $10 at $2,955 per tonne and zinc
MZN3 was down $39.50 at $1,860.50 per tonne.
 Research body the International Lead and Zinc Study Group
said the world zinc market was in surplus by 78,000 tonnes in
the first four months of this year. [ID:nL1696743]
 Nickel MNI3 was down $400 at a quoted $23,600/23,605 per
tonne, and tin MSN3 was up $800 at a quoted $21,800/21,850 per
 Metal Prices at 1146 GMT:
 Metal            Last      Change  Pct Move   End 2007   Ytd Pct
 LME Cu        8035.00       55.00     +0.69    6670.00     20.46
 SHFE Cu*     60850.00      570.00     +0.95   56880.00      6.98
 LME Alum      2970.00       25.00     +0.85    2403.00     23.60
 SHFE Alu*    18805.00      -80.00     -0.42   18180.00      3.44
 COMEX Cu**     361.25        1.85     +0.51     303.05     19.20
 LME Zinc      1885.00      -15.00     -0.79    2370.00    -20.46
 SHFE Zinc*   15665.00      -65.00     -0.41   18950.00    -17.34
 LME Nick     24100.00      100.00     +0.42   26350.00     -8.54
 LME Lead         0.00    -1775.00   -100.00    2550.00   -100.00
 LME Tin          0.00   -21000.00   -100.00   16400.00   -100.00
** 1st contract month for COMEX copper
* 3rd contact month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Nick Trevethan in Singapore;
editing by Christopher Johnson)

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