Asia Metals-Physical nickel premiums weak; others firmer

* Nickel premiums soft in Asia; copper, others rising * Cancelled copper warrants in Busan may rise tenfold By Nick Trevethan SINGAPORE, Jan 14 (Reuters) - Physical nickel premiums stayed soft in Asia at the start of 2010 as inventory piles up in warehouses globally and stainless steel makers face weak demand. Premiums for nickel in Asia were pegged around $120 a tonne above the London Metal Exchange cash price, with material even coming available through clearing at zero premiums. "They just can't sell the stuff. If you take up enough you can get metal through clearing, but for bite size quantities -- say a couple of containers -- you are looking at $120," a dealer in Singapore said. He said that a rise in bagged briquettes in the city-state of just over 9,000 tonnes, or 77 percent, to more than 21,000 tonnes since early September was unlikely to have had any real impact on the market globally. Worldwide, LME nickel stocks have risen 43,500 tonnes or nearly 40 percent to almost 160,000 tonnes. "Sellers wouldn't let go premiums unless there were no buyers." For a graphic, click: http://graphics.thomsonreuters.com/0110/NCTRVLMENKLL0110.gif At the end of last year, South Korea's POSCO said it would keep January stainless steel prices at December levels, and absorb higher production costs. "POSCO has decided to maintain domestic stainless steel prices in January, considering local and overseas market conditions, despite the burden of rising costs from recent rallies in the price of nickel," the steel firm said in a statement. In China, abundant supply in the domestic market also discouraged spot orders, with premiums for bonded metal offered as low as $100, traders said. However things were brighter in copper where premiums have recovered to around $40/50 for warrants in Singapore from as low as $15 before Christmas. "We have started to see a bit of physical activity since the start of the month. Chinese buying around the Lunar New Year can get crazy," another merchant said, adding that cancelled warrants in Asia were likely to continue a recent uptrend. "There is talk of some 40,000 tonnes of cancellations in Korea -- that would be enough to turn the stocks trend around." Stocks of copper in Busan have ticked lower by around 1,000 tonnes in the past week, but at around 100,000 tonnes make up 20 percent of the global stockpile. However, cancelled warrants are rising quickly from around 200 tonnes before Christmas to 4,200 tonnes. But demand traders continue to worry that despite a profitable arbitrage window equivalent to around 600 to 1,000 yuan based on three month prices, buyers have been thin on the ground. "With these price ratios, orders should have flooded into us. But the demand has been weaker than we had expected," said a trader in an international housing firm. For a graphic showing the arbitrages and LME stocks. Click: http://graphics.thomsonreuters.com/gfx/NTREV_20101401105736.jpg For a graphic showing Busan warehouse stocks; click: http://graphics.thomsonreuters.com/gfx/NTREV_20101401150258.jpg Bonded copper stocks in Shanghai were offered at premiums of about $100 and forward shipments at $90, versus $85 for Codelco's copper for the 2010 delivery. Premiums for zinc in Singapore also rose, to $30-40 from $10-15. On a CIF basis, buyers in India, Taiwan and Vietnam were paying $155 and $190 in Bangladesh. In other metals aluminium premiums were of the order of $80 to $100 in Singapore warehouses, tin at $20 to $35 and lead around $45 to $55. (Reporting by Nick Trevethan; Editing by Ed Lane)