* Shanghai gold trading at $30 over London spot
* Supplies tight, gold bars scarce in China
* Demand not at April levels, but still above average - traders
By A. Ananthalakshmi
SINGAPORE, July 12 Shanghai gold premiums were at high levels this week as supplies into the world's second-biggest gold consumer dwindled and are set to remain tight over the next few months.
Prices for gold of 99.99 percent purity on the Shanghai Gold Exchange were nearly $30 per ounce higher than London spot prices.
Normal premiums in Shanghai are about $5 to $7 an ounce, traders said, adding that premiums have been higher than those levels for a while now.
Gold supply in the Chinese market is tight due to import quotas imposed by the central bank. Import licenses are granted only to a handful of banks and export permits are given only to authorized jewellery makers.
A seasonal summer shutdown by gold refineries is also adding to the pressure. Gold bars are scarce in the country, dealers said.
"They say the whole summer will be like this. If you ask the refineries, they say they can deliver only after two months," said one Hong Kong-based dealer.
Another trader said the full impact of the shutdowns will be felt in August, when demand tends to pick up ahead of the wedding season in September.
"The current gold supply is getting increasingly constrained while the demand remains strong," said Albert Cheng, managing director for the Far East region of the World Gold Council.
Cheng said gold jewellery factories in China are working at high levels of capacity and 24-hour shifts to meet the demand.
Scrap supply is also expected to fall this quarter as lower prices prevent customers from selling their old jewellery.
Spot gold is nearly $400 an ounce lower from the beginning of the year and is trading near $1,300, following big dips in April and June.
Premiums in Hong Kong, the main supplier for China, have also moved higher due to supply issues.
Dealers are mostly quoting $4 to $5.50 per ounce for gold kilobars. One dealer told Reuters he was quoting an $8 premium. In Singapore, premiums are about $3.
Traders said demand from China has been above normal levels in recent weeks, though not similar to the rush seen in April when prices fell $200 in two days.
"They have been buying steadily since the April fall," said a trader in Hong Kong. "It's not very aggressive, but they are definitely buying."
The first big drop in April prompted a mad rush in Asia but the subsequent price declines have not, as consumers expect more volatility.
Hong Kong's Chow Tai Fook Jewellery Group Ltd, the world's largest jewellery retailer by market value, said its sales to the Chinese mainland jumped 45 percent in April-June mainly due to gold products.
Wholesale business in the mainland improved as franchisees increased their replenishment of inventories, the company said in a statement on Wednesday. (Editing by Muralikumar Anantharaman)