"We've concluded most negotiations abroad, not in Japan," said a dealer at one of Japan's leading trading houses. "This time, most domestic talks will drag into the new year. Many users want to see how things go after the change in tariffs."

Traders said they had concluded most term contracts with buyers in Taiwan, Japan's top client for refined copper, at premiums of around $43 per tonne, down from $48 this year, and with some in Thailand, Malaysia and Indonesia at premiums around $55-$60.

But they were still in negotiations with domestic clients, with whom they could not hammer out a price formula taking into account the January change in import tariffs to three percent from a fixed 11,960 yen per tonne currently, they said.

"The change means the level of importtariffs will also fluctuate in line with the LME (London Metal Exchange) and the foreign exchange rate," said an industry analyst.

"Of course, users are trying to push down purchase prices as much as possible. They don't seem to have come to a conclusion (on how to calculate the prices)," he added.

Japanese smelters supply the bulk of domestic demand for refined copper, estimated to stand at around 1.30 million tonnes this year, and the old tariff system allowed them a fixed mark-up in domestic prices over foreign copper.

Amid economic uncertainties and predictions that there will be a major supply surplus, no Japanese end-users are in hurry to cover copper needs next year, though many have agreed to take a monthly average for copper prices and the dollar, traders said.

"Japanese (end-users) are very cautious, particularly as the economy is faring poorly and there's a fear that it will remain like this next year. They also don't feel they need to rush to buy copper," said an industry source at asmelter.

"(Even without reaching an agreement on price formula), we would start to deliver copper to clients with term contracts. But we hope to conclude deals by the end of the year."

Though traders expected recent government stimulus packages to prop up the economy by the second half of 1999, they have little hope that domestic demand for refined copper will rise much from the levels expected this year.

"Domestic demand remains slack," said another trader. "The government has been late in coming up with economic stimulus packages. It will take time before we see their effects. During the first half, things will remain flat at best."