Asia Metals-Premium eases; demand slower, sellers reluctant

* Copper premiums edge down, aluminium, zinc and tin firm * High price, negative arb weigh on demand; sellers reluctant By Nick Trevethan SINGAPORE, Aug 20 (Reuters) - Copper premiums in Asia edged down to $80/$100 a tonne this week from $100/$150 in July, but remained steady as sellers weathered limited consumer interest and higher prices, hoping for a rise in demand later this year. "Premiums are steady, not so much from the demand side, but because people aren't willing to sell. The feeling in the market is that we will see a pick-up in demand in September," a Singapore-based merchant said, adding that attractive financing deals also made selling cheap physical material unlikely. As much as three-quarters of the record 4.6 million tonnes of primary aluminium in London Metal Exchange warehouses is thought to be locked up in financing deals and unavailable to the market. "So there is a lot of competition for physical material out there still, though not from consumers," the Singapore-based merchant added. Chinese buyers were reluctant to place new orders for spot copper and aluminium imports due to the closure of the arbitrage window, traders said. LME copper traded at a premium of about 1,100 yuan to Shanghai, accounting for China's 17 percent VAT, making it unprofitable for spot imports and likely to weigh on sentiment. For a graphic showing the LME-Shanghai arb, click: http://link.reuters.com/caz62d Traders are unlikely to take advantage of the wide negative arbitrage to ship physical copper out of China, but many have bought Shanghai and sold London so when the traditional arbitrage returns, closing out those positions will yield big profits. And cash-rich speculators are watching the prices closely to jump in once the window reopens. "Buying copper is a safe-haven for rich Chinese now," a trader in Shanghai said. "The value of money is falling." Premiums for bonded copper in Shanghai have stayed steady at $80-$90 a tonne on expected speculators' buying. Sellers were also unwilling to sell at lower premiums than they had paid. A second Shanghai trader said: "People in the trade are still short of metal for end of the year. We are seeing tightness in the forward spreads but less in the nearbys." He said a renewal of the falling stock trend seen through most of the year's first half would move tightness from far forward to towards the cash date, and that could push up premiums. But high prices are scaring off physical buyers. South Korea's state-run Public Procurement Service said it would pause its stockpiling programme and had no plans to make any large purchases in the near term due to high metal prices. "We are taking a pause and not planning any massive purchases in the immediate future as we have almost reached our target reserve...and also current prices are quite high," said a PPS official. The PPS, which in the first half of the year had been a very active buyer in the physical metals market, last bought metal at the end of July, when it picked up 3,000 tonnes of aluminium at $119 a tonne. Since mid-July aluminium prices have rallied to peaks above $2,100 a tonne from around $1,650. That might come as bad news for Chinese speculators trying to resell bonded aluminium in Shanghai and re-direct shipments expected to arrive in China, because of hefty domestic stocks. "We are thinking of buying the aluminium for other markets," a trader at an international trading firm said. Aluminium was being offered at premiums of $70-$90 in Guangdong.Premiums for the lightweight metal in Singapore were around $90/100 in warehouses in Singapore, about the same as a month ago. Zinc premiums rose to $40/50 a tonne in Singapore from the mid-$20s. Traders said the same competition from cut-price financing details and hopes of renewed consumer buying were underpinning premiums. Lead premiums were essentially flat at $130/140 but tin premiums ticked up to around $30 a tonne above the LME cash price. The premium for nickel briquettes rose to $200/250, while full plate cathode was $250/350. Traders said stainless steel mills were in the market for physical nickel. "Niciel is one market that is seeing a bit of activity. The stainless steel makers are buying as they start to lift output," the Singapore trader said. (Additional reporting by Polly Yam in Hong Kong) (Editing by Clarence Fernandez)