Copper price forecasts for 2012 have been lowered to 8375 from 11250 (USD per ton) at Bank of America Merrill Lynch.

Having been bullish on copper prices since the end of the recession, analysts at the bank had lowered their base metal price forecasts in March, followed by another downgrade in July.

The cautious view was heavily influenced by a cyclical slowdown of growth. The deceleration was captured early by the banks Pressure Indicator, which signalled that copper is a “Sell” at the end of 1Q11.

A commodities note from BofA Merrill Lynch reads:

"Since then, the anticipated soft patch has become more entrenched, with macro economic data generally surprising to the downside.

"Acknowledging these cyclical headwinds, we have further lowered our base metal forecasts.

"The new forecasts acknowledge that downside risks to base metal demand persist across the globe, even though a stabilisation of economic growth is possible through 2012."

That said, there are signs that the outlook for copper prices could find support from signs that China needs to restock reserves.

Copper stood under the influence of Chinese destocking through 2011, which reduced the country’s net imports by around 360kt in recent months.

With excess stocks now extremely low and assuming no hard landing in China, we anticipate that the country’s metal purchases will increase (there are already tentative signs).

Yet, in a falling market, pre-emptive large-scale buying would be unprecedented warn analysts.