Chile Cochilco Raises 2012 Copper Price View to $3.61 a Pound

Chile Cochilco Raises 2012 Copper Price View to $3.61 a Pound

Published November 12, 2012
Dow Jones Newswires

Chilean state copper commission Cochilco raised its 2012 copper-price outlook to an average of $3.61 a pound, from a previous outlook of $3.52/lb.

As Chile produces a third of the world's copper and the industrial metal represents 15% of gross domestic product, 60% of exports and about 20% of government revenues, the price of copper is a closely-watched indicator.

For 2013, Cochilco expects copper to average $3.57/lb, which is higher than the $3.40/lb the government factored in when it drew the 2013 fiscal budget still in Congress awaiting approval.

Chile saves the windfalls from its copper sales in two sovereign wealth funds that currently manage about $20 billion in assets.

The relatively high price outlook for the remainder of 2012 and 2013 are in part due to the additional stimulus measures the central banks in the U.S., Europe and Japan recently have introduced as "these reduced risk aversion, prompting investors to demand riskier assets such as commodities," the copper commission said.

Global copper production in 2013, meanwhile, likely will increase 2.4% year-on-year to 16.96 million metric tons, Cochilco estimates, mostly due to increased output in Chile, China, Zambia and the U.S.

Chilean copper output likely will increase 2% year-on-year in 2013 to 5.585 million tons on increased production at state copper giant Corporacion Nacional del Cobre de Chile, or Codelco. In addition, the Escondida copper mine, controlled by BHP Billiton Ltd. (BHP, BLT.LN, BHP.AU), and the Collahuasi copper mine, controlled by Anglo American PLC (AAUKY, AAL.LN) and Xstrata PLC (XTA.LN) will raise their production levels, Cochilco said in a report published on its website.

The copper market will remain tight as demand is expected to outpace copper supply, the state commission said.

For 2013, Cochilco sees a deficit of 133,000 tons, which comes on the back of a projected 199,000-ton deficit this year.

Write to Carolina Pica at carolina.pica@dowjones.com