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METALS-London copper eases after 5-day gain on tight supply

Melanie Burton
Thursday, 12 Dec 2013 | 11:10 PM ET

* Poised for third weekly rise in four

* LME cash copper trades at 17-month high against benchmark

* Coming Up: US CFTC copper speculative positioning report

(Adds analyst's comment, updates prices)

SINGAPORE, Dec 13 (Reuters) - London copper edged down on Friday after climbing for five straight sessions, with a shortage of refined metal in the physical market underpinning prices.

Copper prices have rebounded more than 4 percent from three-month lows plumbed in November due to a lack of ready metal in the physical market, as traders stock up in anticipation of stronger demand in 2014.

"We're definitely looking at this quarter and the first quarter of next year to be tighter than what the annual surplus would suggest," said Sijin Cheng, analyst at Barclays in Singapore.

"All of the price indicators are pointing to a tight balance and also our contacts are saying it's still tough to get copper. It speaks to the delay in turning concentrate into refined surplus. Also you have had scrap being taken out of the market.. and it probably won't improve too much next year," she said.

Three-month copper on the London Metal Exchange eased 0.3 percent to $7,202.75 a tonne by 0305 GMT. Copper hit a more than one-month high on Thursday and is on track to log gains of around 1 percent for the week, its third weekly gain in four.

The most-traded February copper contract on the Shanghai Futures Exchange slipped 0.4 percent to 51,230 yuan ($8,400) a tonne.

A surplus in the global market for refined copper will widen by more than 60 percent to 632,000 tonnes in 2014 as new mine supply outstrips reviving demand, the International Copper Study Group said this week.

But reflecting tight near-term supply, LME cash copper surged on Thursday to a $14.50 premium against the three-month contract <CMCU0-3>, the loftiest since July 2012.

Copper users in top consumer China are braced to pay higher premiums to procure metal and global exchange stocks have slumped to five-year lows, flagging tight supply that some traders expect to stretch out into next year.

Chile's Codelco, the world's largest copper miner, said on Thursday it would implement measures to safeguard production at its massive Chuquicamata mine, where a strike caused the company to halt smelting operations.

Copper's price outlook, however, remains clouded by the prospect of the U.S. Federal Reserve curtailing its commodities-friendly bond-buying program.

U.S. retail sales rose solidly in November, adding to signs of a strengthening economy that could draw the Fed closer to reducing the pace of monetary stimulus while traders boosted bets Thursday that the U.S. central bank would deliver its first rate hike in years by June 2015.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin ($1 = 6.0711 Chinese yuan)

(Editing by Joseph Radford and Muralikumar Anantharaman)