Jan. 31 (Bloomberg) -- Chile, the world's biggest supplier of copper, said prices of the metal will tumble in 2007 more than it previously forecast after record prices last year prompted producers to boost output.

Prices will average $2.40 a pound, down from an October forecast of $2.80 a pound and an average of $3.05 in 2006, the Chilean Copper Commission said today in Santiago. Supplies will grow at more than twice the pace in 2007 compared with last year, the state-run group said.

``There's a very strong increase in production,'' Eduardo Titelman, the group's vice president, said at a news conference.

Prices for copper have tumbled 10 percent this month and will decline further as companies such as BHP Billiton Ltd., the world's biggest mining company, expand mines, Titelman said. Prices will average about $2 a pound in 2008, he said.

The average estimate of 12 analysts surveyed by Bloomberg was for prices of $2.48 a pound this year and $2.10 next year.

Production in Chile will rise 5.1 percent to 5.63 million metric tons this year, partly as two BHP Billiton mines in Chile boost output, Titelman said. Production in 2006 rose by 40,000 tons to 5.36 million tons, the group said. Output will reach 5.88 million tons next year, according to the group.

Copper futures for March delivery rose 3.30 cents, or 1.3 percent, to close at $2.5945 a pound on the Comex division of the New York Mercantile Exchange. Prices have fallen from a record $4.04 a pound in May.

To contact the reporter on this story: Heather Walsh in Santiago at hlwalsh@bloomberg.net

Last Updated: January 31, 2007 14:02 EST