Chilean state copper commission Cochilco cut its forecast on Thursday for 2015 average copper prices to $2.85 per pound, from a prior $3.00 estimate, amid a collapse in commodities prices, a strengthening U.S. dollar, and worries about top consumer China.
It also forecast average copper prices of $2.80 per pound in 2016.
Prices for the industrial metal have been hovering near 5-1/2 year lows. Concerns about global economic growth and demand for metals in China, which accounts for 40 percent of global refined copper demand, have kept the pressure on prices.
"The forecast for copper prices this year assumes a recovery in the copper market starting in the second half of the year once prices find an equilibrium, uncertainty about China is dispelled and investors adjust their risk aversion," Cochilco said.
Top copper exporter Chile is expected to produce 6 million tonnes of copper in 2015, said Cochilco, who had previously forecast output of 6.23 million tonnes for the year.
That compares to the 5.78 million tonnes produced in 2014, according to data published earlier in the day by the government's INE statistics agency.
Cochilco also forecast a surplus in the global copper market of 275,000 tonnes in 2015 and 404,000 tonnes in 2016.