A month ago, traders thought they were seeing a turnaround from the glacial pace of the first quarter stemming from logjams created by the merger between Union Pacific and Southern Pacific.

"Overall, we've seen no improvement in the rail situation," said a spokesman for Rio Tinto Plc subsidiary Kennecott Utah Copper, which operates a mining complex in Bingham Canyon, Utah.

"In fact, in the last few days, the Union Pacific has diverted cars from the Salt Lake City area to southern California. So things have actually deteriorated for us."

Kennecott is seeking alternative methods of shipment and says that customers have not been affected by the delays, the spokesman said. But the company announced a price increase earlier this week, and some have suggested that the rail situation is part of the reason.

A Union Pacific spokesmantold Reuters, "We're at a plateau level right now. On a day-to-day basis, we're going to have our ups and downs. And there is some congestion, for lack of a better word. But we're not seeing any gridlocks. There's nothing systemic disrupting operations."

Union Pacific is in the middle of a $400 million "construction and maintenance" plan that "could cause congestion," he said, "but there's nothing we can do about that." The maintenance is expected to be completed in the fall.

"I would say the rail situation has gone from unbearable to horribly bad," said Mark Beck, vice president of metals procurement for Essex International. "I don't think anyone's satisfied. It's a severe situation."

Another copper producer who requested anonymity said that he'd seen no improvement. "We're still having trouble getting empty cars back into our plants," he said. "There are severe shortages in the El Paso area. The best you can say is that the situation has bottomed out. But I don't think there's been anyimprovement."

Phelps Dodge Corp operates a 380,000 tonne-per-year copper refinery in El Paso, but vice president and treasurer Tom Foster told Reuters, "I've heard no indication that things have gotten any worse."

Asarco Inc suffered its share of freight woes, with slow shipments of anode from its El Paso smelter to its Amarillo, Texas refinery. The company has planned to use anodes from BHP Copper's smelter in San Manuel, Ariz.

But BHP was waiting for concentrate shipments to arrive at its smelter from its mines in Chile and Peru, executives said earlier this week. Those shipments were bottled up at the Guymas port on the West Coast of Mexico. Further delays occurred along the Mexican rail lines.

The upshot was that Asarco had to cut production at its Amarillo refinery by 15 per cent.

But if spot merchant premiums are any indication, most customers haven't felt a severe impact. Merchant premiums in the Northeast around 3.75 cents over COMEX spot, which was 76.00 cents a lb at 1322 EDT. In April,they were as high as 5.00-6.00 cents.

Merchants attribute the weaker premiums to a softening of demand that is typical as the market moves into the summer months. Material has also arrived in New Haven from Europe and South America, traders said.