Asia Metals-Copper premiums up on signs of China buying

* Copper premiums firmer; buyers return after holidays * Surprise rise in September imports suggests firm demand * China, South Korea see rising demand, prices in 2010 By Nick Trevethan and Manolo Serapio Jr. SINGAPORE, Oct 16 (Reuters) - Physical copper premiums firmed as business picked up after week-long Chinese holidays at the start of October and on signs that demand from the world's biggest copper consumer may surprise on the upside. Merchants pegged premiums for metal in Singapore at around $60 a tonne above the London Metal Exchange cash price, from $40/$50 at the end of September. "We are seeing business around the $60-mark. Things seem to be recovering after the holidays and we could see more Chinese buying," said a merchant attending the LME dinner week in London. He added that with Chinese import demand for copper up 23 percent in September, despite very little opportunity to arbitrage, the general situation was all the more encouraging. Chinese imports in September were almost 400,000 tonnes, of which 200,000 tonnes or more may have been in the form of copper cathode. "Quite clearly China has been buying and my guess is since the arbitrage is shut, it's for consumption rather than opportunistic stockpiling," a trader in Melbourne said. "That puts a pretty positive spin on the demand picture there and suggests that there might be additional room for Shanghai prices to move ahead and reopen the arbitrage window." Since June the LME-Shanghai arbitrage has closed with prices in Shanghai currently trading at a discount of around 800 yuan including China's 17 percent on the basis of third month copper in China and the three-month contract in London. The market may see some support from slowing deliveries into Asian warehouses. Copper stocks in LME warehouses in Asia stand at 59,725 tonnes, equivalent to around 17 percent of the total in the exchange's warehouses. Most of the material is in Busan, South Korea, where stocks have ballooned to 50,025 tonnes from just over 1,000 tonnes in June. A third trading source said that higher copper prices -- up a quarter since the start of July and more than 100 percent this year, are putting off some physical buyers, but the attitude to prices may be starting to turn as consumers start to accept a higher trading band. Chinese copper smelters expect consumption and prices to strengthen in 2010, estimating consumption may rise at least 10 percent on the year above 5.5 million tonnes in 2009 with demand lifted by China's 4 trillion yuan stimulus package. South Korea's consumption of copper is also expected to rise, up nearly 8 percent in 2010, aluminium by up to 15 percent and refined nickel by 37 percent, a director at South Korea's Public Procurement Service (PPS) said earlier this week. Aluminium ingots in Singapore carried a premium of $100 above LME cash prices, up about $15 since the end of last month, while metal in South Korea was slightly more expensive. South Korea bought 4,000 tonnes of aluminium ingot last week at premiums between $119 and $137 a tonne over LME cash prices, the PPS said. On Friday, the PPS issued tenders to buy another 5,000 tonnes of aluminium ingot of non-western origin for Dec. 30 shipping.