London, Oct 16 - London Metal Exchange copper prices are starting to look overdone, and a slide below USD8,000 a metric tonne is likely before the year ends, market participants say. The price of copper will largely be determined by China's appetite, and there are early signs that the world's largest consumer of commodities may import a little less refined copper this quarter. "We are in an environment where prices could slip," said Calyon Financial analyst Michael Widmer. Sentiment is bullish but fundamentals aren't supporting a price rise right now, he said. "The big question is how strong China is going to be and how much they will import," said Barclays Capital metal analyst Gayle Berry. Preliminary data from China's General Administration of Customs Friday showed copper scrap imports totaled just over four-million tonnes from January to September, a rise of 16.6% from last year during the same period. The strong scrap imports pose a risk to future imports of refined copper, Barclays' Berry said. China may import less refined copper as a result and instead use scrap material to meet its copper needs, Berry said. "It's too early to tell what the numbers mean," Berry said, but added the price difference between Shanghai Futures Exchange copper and London Metal Exchange prices isn't favorable for copper imports into China right now and the country isn't importing as much as the market had anticipated during this period. "The narrowing of the premium makes it less attractive for China to import," Berry said. Furthermore, exchange inventories have been rising, with LME inventories at a three-month high to total 139,650 tonnes. And after several weeks of declines, SHFE inventories rose 10,769 tonnes on the week as of Oct. 12. "With the Chinese reluctant to buy copper above $8,000/tonne and LME stock increases occurring in Europe, suggesting subdued demand, a break of the $8,000/tonne level could see falls towards $7,500/tonne," said UBS commodity analyst Robin Bhar. UBS lowered its one-month copper price to $7,500/tonne from its previous estimate of $8,500/tonne due to weaker physical premiums and expectations of a synchronized deceleration in global growth over the months ahead. "The loss of domestic demand momentum in Europe and Japan - as well as in the US - combined with recent evidence that export growth in the developing economy complex has been ebbing, suggests that the world economy is on less solid foundations," UBS' Bhar said. And Standard Chartered forecasts the fourth quarter copper price to weaken slightly to average $7,800/tonne. "There are fundamental reasons for the rally to run out of steam," said Daniel Smith at Standard Chartered. Compounding the stock rises, physical traders have been saying there is plenty of copper around and industry estimates for the copper balance indicate the market will be in a small surplus in 2008. Jose Pablo Arellano, chief executive of Chilean state-owned miner Codelco, the world's largest copper producer, said last week that the global refined copper market will likely be in a small surplus in 2008. However, the market remains vulnerable to production disruptions that could quickly push the refined market into deficit, he said. But at the moment, supply disruptions seem to have been resolved. The recent eight-day strike at Southern Copper Corp.'s Peru units has ended and the company said no production was lost. "We remain skeptical about copper in the short to medium term, firstly as we expect mining production to expand strongly, and secondly, we do not envisage China's imports rising any further," Commerzbank said in a research note. Copper prices were hit hard over the summer at the height of the subprime crisis in the US, at one point dropping as much as 16% from the start of August due to fears that a slowdown in consumer demand would weaken copper consumption. But while a weak US consumer is bearish for copper, it's China that's the big copper consumer. "Since the beginning of the year, US demand has been weak so if it continues to be weak that's not new," Barclays' Berry said. "There are also reports that the European market might be weaker than previously expected, but what China does is more important." Most demand is coming from a combination of Brazil, India, Indonesia and China, where consumption has increased the most between 2002 and 2007 by 2.36-million tonnes, Independent consultants Bloomsbury Minerals said this month. However, Julian Jessop at Capital Economics said China's demand shouldn't be taken for granted and India is still a long way from becoming the next China. "The bullish case for copper is largely based on booming demand from emerging markets, led by China," Jessop said. "Strong Chinese demand cannot be taken for granted, especially if the Chinese government achieves its aim of rebalancing the economy away from commodity-intensive investment." Additionally, the new investors seen piling into copper may not ride out the volatility in returns, Jessop said. Longer term, Bloomsbury Minerals predicts copper prices should rise to $9,000 a metric tonne by April-May 2009, as a combination of a physical demand and a peak in index fund holdings takes its toll. Speculative investors have been partly behind copper's price rise, said Triland analyst Michael Khosrowpour, and they could continue pushing copper higher. Additionally, US dollar weakness caps copper's losses. But, he said, with the Southern Copper Corp. strike resolution, there is no "real justification for copper above $8,000/tonne," adding fundamentals should outweigh speculative interest and push LME copper to $7,600/tonne by the end of 2007. [Source: Dow Jones Newswires]