Copper prices have bounced off five-year lows on the back of hopes of economic stimulus in China, with one prominent bank lifting its copper price forecast by more than 20 per cent. 

The price of copper had been dropping sharply since the middle of December last year, dipping to $US5395 a tonne at the end of January – a five year low. But the price jumped to a six-week high of around $US5917.50 earlier this week and in another sign of momentum investment bank UBS raised its 12-month copper forecast to $US6700 a tonne from $US5500. UBS resources analyst Jo Battershill said copper had fallen in the face of the opening of a number of new mines, prompting perceptions there would be an oversupply. But some older mines were not producing as much copper as expected, which meant prices were starting to go back up, Mr Battershill said. 

There had also been improvements on the demand side of the equation for copper, which, in the past, has been a fairly good indicator of global growth and for this reason is sometimes nick-named "Dr Copper". 

"We had a late Chinese New Year," Mr Battershill said. "Chinese activity between Western Christmas and Chinese New Year was fairly limited, but we're seeing a bit of a reaction coming back from holidays 

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Mr Battershill said a surprise rate cut in China at the weekend and signs of fresh demand from the United States may have also helped the price of copper to rally.