Asia Metals-Copper premiums ease as metal streams to Asia

* Asia copper stocks balloon, premiums ease * Aluminium steady, tin rises but zinc sinks By Nick Trevethan SINGAPORE, Sept 25 (Reuters) - Asia physical copper premiums dipped this week as a steady inflow of metal into Asian locations in the past few months weighed on sentiment. Stocks of copper in Busan, South Korea, have ballooned in the past few months, up at 45,650 tonnes from just over 1,000 tonnes in June. Traders said producers were reluctant to load up London Metal Exchange warehouses in Rotterdam and other European locations, and instead were shipping to Asia and the United States. "It's part of the strategy ahead of the annual premium talks. The producers don't want to see Europe overflowing with metal. Better to stick it on a boat to Asia and try to lose it there for a while," a trading source based in Singapore said. Negotiations for 2010 annual copper premiums are due to start in a couple of weeks during the LME Dinner week, with the world's biggest producer, Chile's Codelco, likely to try to win an increase on the 2009 premium settled with China at $75. Traders said much of the inflow was metal originally ordered for China but re-routed to South Korea due to the collapse in the arbitrage window from July. But given China's vast import demand this year and the contraction in inflows seen since July's all-time high, the increase in stock levels in Asia was small. And premiums have not totally collapsed. "We heard of sales of material in Shanghai and South Korea at premiums of as little as $15 in the past few weeks, but those look like distressed sellers. Other metal is trading at higher levels," a dealer in Shanghai said. He said business in Shanghai was typically done at $45-$55 a tonne above the LME cash price, while premiums in Singapore were around $60 versus $70 at the start of September. But another trader pegged premiums in Singapore lower at around $40/$50. Premiums im most European locations, he said, were $15 and the market was also worried about larger deliveries into the United States -- upwards of 30,000 tonnes -- by Latin American producers. USE OR LOSE In South Korea, copper premiums were fairly robust. Seoul bought 3,000 tonnes of refined copper cathode for shipping by October 31 to the port of Incheon, the state-run Public Procurement Service said this week. The agency bought 1,000 tonnes at a premium of $48 a tonne over London Metal Exchange cash prices including cost, insurance and freight (CIF), from Prime Global, and the remainder at a premium of $69 a tonne to LME prices, CIF, from LS-Nikko Copper, an official at the agency said. The PPS also bought 4,000 tonnes of aluminium ingot for Nov. 30 shipping at premiums between $124 and $135. The Singapore trader pegged premiums for aluminium $85 in Singapore. "The Chinese are buying material, and are willing to pay decent premiums. They are sitting on a lot of short-term letters of credit that they have to use or lose. The money is burning a whole in their pockets." Aluminium stocks stand around 3.6 million tonnes - enough to supply the world for more than a month, versus copper's 6.5 days of supply in LME storage. But analysts estimate that 75 percent of that metal is tied up in financing deals and not easily accessible to the market in the near term. Tin premiums were of the order of $50 a tonne in Singapore for high purity metal, while zinc fell to $15 for metal from the Skorpion refinery in Namibia. Other origin material was around $45 from $30 last week and $60 at the start of the month. (Editing by Sanjeev Miglani)