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Shanghai copper futures closed steady on Monday, recouping earlier losses as London prices rallied after workers announced a strike at a smelter in Chile.

Chinese copper futures were little changed, with the most active February contract 20 yuan weaker at 63,090 yuan a tonne.

The contract had earlier dipped one percent to 62,500 yuan, a one-month low.

At 0727 GMT, copper for delivery in three months on the LME was up $85, or 1.25 percent, at $6,720 a tonne from the close in London on Friday, when the market shed $145.

Turnover was 240 lots versus 100 lots around the same time on Friday.

Dealers said prices were supported after workers at the Altonorte copper smelter in Chile, which produced just under 300,000 tonnes of metal in 2005, rejected a final contract offer from owner Xstrata Plc

A strike is scheduled to start at 1100 GMT on Monday. "The story today is probably going to be Altonorte. There isn't much else out there and trade has not been especially busy," a U.S.-based dealer said.

"But once the market cracked $6,700, we saw a little more interest," he added.

China's domestic copper market could see support from declining treatment and refining charges -- fees to convert copper ore into metal.

"Traders are concerned about the production decline at Chinese copper refiners due to lower refining fees," said Yang Jun, an analyst at Dalian Northern Futures Agent Co. Ltd.

He added that Chinese smelters would have to accept fees of $60-70 per tonne, down from $100.

"The lower charge will drive some Chinese smelters, especially smaller ones, to cut production."

Copper stocks in LME warehouses at 174,100 tonnes on Friday have risen nearly seven-fold from a low of 25,525 tonnes in July 2005.

"The persistent stock increases are starting to weigh on sentiment," Macquarie Bank said in a weekly report.

"Particularly now that the SRB (State Reserves Bureau) is believed to have completed its sales, the inventory increases do appear to represent a real shift into surplus."

The most active February Shanghai aluminium futures contract lost 60 yuan to 20,510 yuan a tonne.

LME aluminium was flat at $2,800.

"In aluminium, there may be some value. We are 12 percent below the peak and trending higher. Inventories are falling. It may be worth a shot," Sean Corrigan, chief investment strategist at Diapason Commodities Management, told Reuters.

Nickel for delivery in three months hit a new high of $34,950 per tonne on the London Metal Exchange on Friday, before closing at $34,350.

By 0727 GMT, nickel was at $34,500.

"Producers are having trouble keeping up with demand. Stainless steel demand, for example, is sufficient to keep nickel producers busy for some time to come," Corrigan said.

"If China continues to grow, nickel miners will need to make sure the new sources that they have been promising to bring on actually arrive."