"If smelters and miners fail to strike deals for 1999 supply contracts, it may force some copper smelters to shut down their high-cost plants as copper prices are just hovering above 11-year lows," said a trader who is close to the local smelter industry.

Current copper concentrate supplies have been cut by mine shutdowns over the last 12 months, tipping the power balance in favour of the miners.

"It may be the time for smelters to consider shutting down some of their loss-making plants, if they cannot get reasonable treatment charges and refining charges from miners under current low copper prices," he said.

Shut-downs could also help ease current tight concentrate supplies in the world market, he said.

Traders said LG Metals Corp was awaiting the outcome of negotiationsbetween Freeport McMoRan Copper & Gold Inc and the Japanese smelter pool, which may be a benchmark for next year.

"We expect some results of the negotiations between Freeport and the Japanese smelter pool to come out next week," an LG Metals trader said.

Freeport, which is expected to produce 635,000 tonnes of recoverable copper from its Grasberg mine in Indonesia this year, is now believed to be asking for a treatment charge of $58.50 a tonne and a refining charge of 5.85 cents per pound.

The Japanese smelter pool, which accounts for about 12 per cent of the world's smelting capacity, is now believed to be asking for $73 a tonne/7.3 cents a pound, traders said.

Treatment and refining charges refer to the fee charged by smelters to refine copper concentrates produced by miners into exchange-deliverable copper cathodes.

The trader said LG Metals, the country's only copper smelter and refiner, was expected to import over one million tonnes of copper concentrates next year, compared to about 920,000tonnes in 1998.

South Korea's copper concentrate imports surged to 776,709 tonnes in the first 10 months of 1998 from 433,680.590 tonnes a year ago, data by the Korea Trade Information Services showed.

Most of the increase in imports is due to an expansion in production capacity opened earlier this year by LG Metals.

Its concentrate imports totalled 299,964 tonnes from Indonesia in the period, followed by Australia with 131,152 tonnes, Papua New Guinea with 87,951 tonnes, Chile with 96,937 tonnes and Argentina with 64,568 tonnes, the data showed.

This compared with 197,372 tonnes from Indonesia in all of 1997, 57,253 tonnes from Australia, 42,650 tonnes from Papua New Guinea, 100,544 tonnes from Chile and nothing from Argentina, it showed.

South Korea's real gross domestic product contracted by 6.8 per cent year-on-year in the third quarter of this year, provisional figures from the central Bank of Korea showed on Wednesday.

A central bank statement said sluggish domestic consumption andinvestment, coupled with slower export growth, were responsible for the sharp contrast in the GDP performance from a year ago.