SANTIAGO, April 6 (Reuters) - Chile's central bank raised its 2010 copper price forecast by 15 percent on Tuesday, but expects a slight retreat next year, it said in a key report on economic conditions in the world's top producer of the metal.
The bank raised the average price forecast for this year to $3.10 per pound from the previous $2.70 a lb, it said. That's well behind current prices, which touched a 20-month high of nearly $3.64 <HGc2> on Tuesday and averaged nearly $3.30 during the first quarter of the year.
The bank said in the report that it noted a rise in raw material prices, especially in the metals and energy sectors, in recent months.
It also forecast copper prices at $2.90 lb in 2011.
The bank joined a wave of analysts who have revised upward their price forecasts for this year as copper leads the post-crisis recovery in commodity markets, fueled by China's continued demand and improving economic conditions in developed markets.
In the bank's monetary policy report, it said that the unexpected rise in the price of copper in recent months has come despite the appreciation of the dollar, which typically takes the wind out of commodities prices in general.
It said that estimates of the red metal's supplies in 2010 had been too optimistic.
Cochilco, the state think-tank that typically guides government forecasts on copper, told Reuters this week it was likely to revise upward its current 2010 forecast to $3.30 lb, versus the current $3.10 lb level.
Many analysts warn that current price strength may fade in the second part of the year as China applies monetary curbs to avoid overheating its economy and risk-asset plays drop out of favor, although a lack of new supply projects down the road threatens to tighten the market again after next year.
A Reuters poll in January found that London Metal Exchange three-month copper <MCU3> was expected to average $7,077 a tonne this year, versus $5,178 in 2009. On Tuesday prices topped $8,000 for the first time since the height of the financial crisis.