Copper prices in 2009 and 2010

Chile's state copper commission Cochilco predicts the price of copper will average $1.60/lb in 2009 and $1.50/lb in 2010.

Cochilco executive VP Eduardo Titelman explained at a Santiago news conference that the demand for copper in 2009 and 2010 is likely to be "modest."

Considering Chile is the world's biggest producer of copper, it is good the country invests a lot of energy into copper forecasts. Check out the chart on this post from IncaKola News comparing Cochilco's copper forecasts with the real market prices between 2005 - 2009.

I'd say they do a pretty decent job, most of the time that is...

For major copper producers like Chile and Peru this might spell bad news. Both depend heavily on copper which in 2007 averaged $3.23/lb. If Cochilco's predictions are correct, the two countries should trim their spending over the next two years.

However this may prove difficult for Chile and Peru to do with upcoming elections and the looming global recession in the background. Chile is fortunate to have stashed away significant reserves from the boom years. Peru is not as lucky and will find it even more difficult to trim its spending than it's southern neighbor which has proved on various occasions it is far more capable of exercising restraint and making sound economic decisions when necessary.