Copper rallies 2.5 pct; dlr, China snow support

By Nick Trevethan

SINGAPORE (Reuters) - Copper rose more than 2.5 percent in London and Shanghai on Monday, bolstered by a weaker dollar, bad weather in northern China and a big rise in annual copper premiums for the world's biggest buyer, China.

Chile's Codelco, the world's top copper producer, has raised term premiums for refined copper to China by $10 per tonne to $85 per tonne for delivery in 2010, three buyer sources said.

Chinese buyers had expected Codelco to raise 2010 premiums by $5-$10 a tonne after a fall this year, while western analysts had been looking for numbers closer to the $74-$75 settled with Japanese and South Korean buyers last week.

"There is a supply story looming. But $85 is a very strong number. It's certainly positive for the market. Premiums tend to be a reasonable indicator for demand, and though supply signals -- the stockpiles -- aren't telling us that, it should be enough to keep prices moving higher," ANZ's senior commodities analyst Mark Pervan said. Three-month copper on the London Metal Exchange rose 2.6 percent or $168 to $6,688 at 0716 GMT and earlier touched $6,702, its strongest since October 26.

Benchmark third-month Shanghai copper rose 2.7 percent to close at 52,390 yuan, but the most active fourth month, February, rallied even further -- up 3.1 percent at a 13-month high of 52,750 yuan.

"There is heavy snow in the north of the country. The market is rallying on a rumour that it is adversely affecting communications and smelter operations and is triggering some of the buying," a Shanghai trader said.

Unseasonably early and heavy snow in northern China has caused at least 38 deaths, brought down more than 7,000 buildings nationwide and cost around 3.5 billion yuan in losses, the official Xinhua news agency said.

The Shanghai trader said the talk had narrowed the discount for Shanghai copper versus LME to 1,000 yuan from above 1,500 last week.