Chile forecasts copper prices to ease

SANTIAGO, Jan 26 （Reuters） - Copper prices have peaked and will ease in 2012 as a supply deficit shrinks and demand growth slows slightly, world top producer Chile said on Wednesday.

Chile's state-run copper commission, Cochilco, predicted copper prices will decrease to $4.04 per lb in 2012 after averaging $4.17 per lb this year. That still marks the best two years for copper prices on record.

Still, the commission's 2011 price forecast is lower than the $4.32/lb mean predicted in a Reuters poll COMMODITYPOLL02.

Copper prices in London CMCU3 rose 0.59 percent to $9,305 a tonne or around $4.22 a lb on Wednesday.

Cochilco expects a copper supply deficit of 466,000 tonnes in 2011, greater than the shortfall of 90,000 tonnes last year. The group's view is slightly above than the 444,000-tonne deficit predicted by a Reuters poll on Monday.

The group projected a supply deficit would shrink to 297,000 tonnes in 2012, with global supply expected to rise by 5.2 percent in 2012 from this year's levels to 20.7 million tonnes.

"The supply of copper will be unable to satisfy demand from the main consuming countries like China, Turkey, India and some countries in the European Union," Cochilco said in a statement.

The commission said it expects demand in top consumer China to grow 6 percent this year.

Andres Mac-Lean, Cochilco's executive vice president, said global demand was expected to grow by over 1.0 million tonnes a year in the next two years, equivalent to the annual output of the world's biggest copper mine, Escondida.

Global copper output is expected to reach 16.5 million tonnes in 2011, up 345,000 tonnes from the previous year, the group projected.

Chile, which produces a third of the world's mined copper, is seen producing 5.7 million tonnes of copper in 2011, up 6.4 percent from 2010. Chile's copper output is expected to increase by 1.5 percent to 5.8 million tonnes in 2012.

Cochilco said Collahuasi, the world's No. 3 copper, lost around 29,000 tonnes of copper in 2010 in part due to a month-long strike by its workers at the end of the year.