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Copper prices were higher on Thursday with the market keeping an eye on a possible strike at a big producer and re-stocking by major consumer China, traders said.

"Copper has been trading sideways for many months and it lacks impetus," Adam Rowley, analyst at Macquarie Bank, said.

"The two key drivers now are whether workers at Codelco's Norte division will strike later this year and whether Chinese demand will bounce back."

Labour contracts for some 6,000 workers at Codelco's Norte division expire at the end of December and unions are expected to bargain hard for a share of soaring profits due to record metals prices.

"Ahead of Codelco's labour contract renewal, there is an understandable reluctance to sell copper," Rowley said.

He added: "There has been a lot of de-stocking this year in China and there is a strong possibility that we will see buying early next year."

On a net basis, China imported 46,767 tonnes of refined copper in September, an increase of 2 percent compared with August, but Chinese copper imports are still half of what they were in September last year.

Some analysts attribute the fall in imports to sales from a Chinese government stockpile, while others think outright Chinese demand is falling.

STOCKS RISING

Copper in delivery in three months on the London Metal Exchange was quoted at $7,200/7,220 a tonne at 1045 GMT, from $7,150 on Wednesday when the market lost more than three percent after a sharp rise in stocks.

On Thursday, stocks rose 4,300 tonnes to 139,475, just under three days of global consumption.

Analysts noted that rising stocks of metal on the LME, which are up 20 percent since mid-October to their highest since May 2004, was putting pressure on the market.

"Coming to the end of the year you could expect people to put metal on warrant to cut their working capital. But two consecutive weeks of rises, and quite punchy rises, are significant," ABN AMRO analyst Nick Moore said.

"It also runs counter to what we are seeing in zinc and aluminium, where stocks are falling and adds to the view that Chinese demand has been overestimated."

Increased availability has depressed cash copper prices to the point where the premium against the three-month contract moved to a discount for the first time in three years earlier this week.

ALUMINIUM

Aluminium was up $26 at $2,756/2,760 a tonne.

"The market is recovering a little. For whatever reason, all the metals sold off late in the afternoon. Short-term support is around $2,680-2,700 and if we break below there it could get pretty nasty," a trader said.

"On the upside, the target is $2,950/3,000. If the market does get up to those levels it will get sold off pretty quickly."

China lifted the export tax on copper, nickel and aluminium to 15 percent to ease investment in energy-intensive sectors last week, which drove Chinese smelters to deliver thousands of tonnes of primary aluminium ingot to bonded warehouses at Chinese ports this week to avoid a higher tax on the metal..

Lead and zinc both of which hit fresh contract peaks on Wednesday were steady at $1,655/1,665 and $4,210/4,230 respectively.

"Zinc looks incredibly tight and will only get tighter over the next six months and prices will go significantly higher," Rowley said.