* Premiums for copper in Rotterdam quoted at $80-95/t * Consumers active in spot market to meet demand * Copper cash-to-3-month backwardation soars to $32.50 By Harpreet Bhal LONDON, March 19 (Reuters) - European copper premiums have more than doubled since early 2012, rising to above $90 a tonne as consumers scramble for material to meet growing demand in a market tightened by a lack of available supply from producers, traders said. Premiums for Grade A copper in Rotterdam CU-GA-ROT, paid over the London Metal Exchange cash price, were quoted at $80-95 a tonne, as producers struggle to meet demand from consumers who are replenishing low stocks on improving end-user demand. Consumers had stayed away from booking long-term contracts at the end of last year due to an uncertain outlook for the economy and demand, in the hope they would be able to buy on the spot market for lower premiums. But producers are finding it hard to meet demand, pushing premiums up to levels not seen since early 2011, and more than double levels from the beginning of this year. "A lot of customers thought it would be low demand but all of our customers see better demand than expected (this quarter) so they are active in the spot market," a source at a major European producer said. "The problem is we don't have anything to sell." Traders said consumers were betting on the improving demand to continue into the second quarter, but producers are now booked-out after selling material to Chinese buyers at the start of the year. "All the warrants are pretty much booked. It's up to traders and producers to find some extra material in case anybody needs it," a physical copper trader said. "People are optimistic that the second quarter will see good demand after the strong demand in the first quarter came as such a surprise." Suggesting tightness in the physical market, the premium of cash over the three months futures in LME copper MCU0-3 - a structure known as backwardation -soared to $32.50, a level not seen since early January 2011. At the same time, inventories in LME-registered warehouses have been on a downtrend, falling to their lowest level since mid July 2009 at 263,825 tonnes, with the ratio of cancelled warrants - material tagged for future delivery - to total stocks at 33.5 percent. When the import arbitrage was favourable, material was moved to China, where latest data showed Shanghai's copper stockpiles are now at a decade-high of 227,276 tonnes. CU-STX-SGH "If you look at LME warehouses in Europe, there is nothing lying there. And if it is being held in strong hands and is not available to the market, consumers have no other choice but to turn to the spot market," another physical trader said. "And producers are also tight of copper so there is general tightness and I don't expect it to change within the next two or three months." The arrival of previously delayed vessels from Chile helped ease some of the tightness in the physical copper market, traders said, but premiums have so far held firm. "I have heard that the vessels have arrived but at the moment premiums are still stable at around $95 and that is still high compared to levels of around $40 at the beginning of the year," the trader said.

Source