REFILE-METALS-Copper gains on firmer demand and talk of Iran ceasefire

By Eric Onstad

LONDON, March 25 (Reuters) - Copper prices rose on Wednesday after reports that the U.S. was seeking a ceasefire in the Iran war and due to firmer Chinese demand, but the market was wary after Tehran delivered an initial negative response to a U.S. proposal.

Benchmark three-month copper CMCU3 on the London Metal Exchange climbed 1.9% to $12,330 a metric ton by 1700 GMT, having slipped 0.6% the previous session.

"Copper seems like it's stabilising, but we are potentially approaching the beginning of the end of the war; certainly not the end because it takes two to tango," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Israel and Iran exchanged airstrikes on Wednesday as Iranian officials publicly poured withering scorn on the prospect of any negotiations with the U.S. administration after Pakistan delivered a 15-point proposal on behalf of Washington.

IMPROVED PHYSICAL DEMAND

Signs of improved physical demand in top metals consumer China also supported prices.

"Now we are seeing some pent-up demand coming back at these lower prices and that will obviously also help to stabilise and over time underpin prices," Hansen said.

"The upside technical level of $12,500 seems to be an area where the next battle could be played out."

High prices for LME copper, which hit a record peak of $14,527 a ton in late January, dampened demand. However, prices slumped after Israel and the U.S. attacked Iran, raising fears over global growth and metals consumption.

Firmer demand was highlighted in the Yangshan copper premium SMM-CUYP-CN, a gauge of China's appetite for importing copper. The premium surged by 33% to $69 a ton, its highest since June last year.

Nickel CMNI3 was the strongest performer, advancing 2.6% to $17,395 a ton after top producer Indonesia said a windfall tax on the metal could come into force on April 1.

Aluminium CMAL3 was the only LME metal in negative territory, easing 0.6% to $3,241 a ton.

The lightweight metal used in transport, packaging and construction had rallied after the start of the war raised supply concerns since the Gulf is a major producer, but a potential end of the conflict could ease those worries.

Among other metals, LME zinc CMZN3 gained 1.3% to $3,080 a ton, lead CMPB3 added 1% to $1,912 and tin CMSN3 climbed 1.4% to $44,845.