HSBC has lifted its forecast for copper prices in 2013 due to expectations of a more structurally balanced market and positive sentiment.
Analyst Andrew Keen said in a note to client that the "market remains balanced in our view, and this is enough to keep prices high when sentiment is good."
The new forecast raises the average cash copper price in 2013 to $8,000 per ton from $7,500. Benchmark three month copper futures on the London Metal Exchange recently breached the $8,000 to hit $8,066 in Monday morning trading.
While Cochilco, the state copper commission of Chile, the world's leading copper producer, expects production to rise 3% year-on-year to reach 5,596 million tonnes in 2013 on the back of heavy mine investment, analysts point out this upbeat forecast could be scuppered by declining ore grades and operational issues.
