Codelco chief bullish on copper prices Copper prices could fall 10 per cent in the short term due to high inventories in China, according to the world's largest miner of the metal. But Codelco still painted a bullish outlook for the rest of the year, anticipating a "tight" market. Diego Hernández, chief executive of the state-owned Chilean miner, said in an interview with the Financial Times that the red metal would trade between $7,000 and $8,800 this year, compared with current prices of $8,010 a tonne. The views of Codelco are closely watched in the industry as the company, with a tenth of the world's mine copper production and a large network of traders, has a privileged view of the state of global supply and demand. Copper prices are seen as a bellwether for the global economy thanks to its widespread use in by the manufacturing industry. Copper is also critical for the profitability of blue-chip miners such as BHP Billiton, Freeport-McMoRan, Rio Tinto, Anglo American and Xstrata and traders including Glencore and Trafigura. Mr Hernández's prediction encapsulates a mood of nervousness that has pervaded the annual Cesco week gathering of the copper industry in Santiago, as traders and investors fear that Chinese companies could step back from the market after a buying spree in the past five months. Benchmark copper prices on the London Metal Exchange have fallen more than 7 per cent since the beginning of the month. Mr Hernández's prediction for prices was slightly more bullish than six months ago, when he said that copper would trade between $6,600 and $8,800 in 2012. Since then copper consumption in both Europe and the US has improved, traders say. The head of Codelco rebuffed fears among some Western investors that slowing growth in China could lead to a deeper correction for copper, saying that any "volatility" - a miners" euphemism for falling prices - was likely to be shortlived. "There is a concern and we are seeing some volatility on price for the short term," he said. But we believe after 2-3 months the supply-demand trend will prevail. Copper prices fell $6,635 in October amid fears for the eurozone economy, but rebounded quickly as central banks injected liquidity, and Chinese traders bought. Mr Hernández's view was echoed by other mining executives in Santiago, who expressed confidence that Chinese economic growth, albeit at a lower rate than in recent years, would continue to support commodities demand. China reported GDP growth of 8.1 per cent for the first quarter of this year, the slowest since 2009 and the government has announced a full-year target of 7.5 per cent. Andrew Harding, head of copper for Rio Tinto, said 7.5-8 per cent was a "strong number" for Chinese growth. "I am a fervent believer that the Chinese have control of their economy," he said. Nonetheless, investors have become bearish about copper's short-term prospects because a sharp increase in Chinese inventories in the first three months of 2012. Stocks at Shanghai Futures Exchange warehouses have more than doubled to more than 200,000 tonnes, and unreported stocks at so-called "bonded warehouses" have surged to more than 600,000 tonnes, according to traders" estimates. Mr Hernández predicted that copper demand would continue to outstrip supply until at least mid-2014, when planned new projects would in theory be sufficient to meet demand. But he warned that "not all those projects will be executed according to announcements." The copper industry has suffered over the past five years from rampant cost inflation and significant delays at key projects.