FCX Freeport McMoRan Inc

By Amrith Ramkumar and David Hodari 

Copper prices fell Friday on worries that the market will continue to be well supplied, limiting future gains.

Front-month copper for May delivery shed 2.2% to $3.0460 a pound on the Comex division of the New York Mercantile Exchange -- its worst day since Feb. 7. Prices had risen in four-straight weeks entering this one but have tumbled of late and are down 7.1% in 2018, after hitting a nearly four-year high late last year.

Investors are worried that the supply disruptions that buoyed prices last year from mining labor contract renegotiations and other conflicts with host governments haven't materialized yet in 2018, meaning the market could continue to be well supplied.

On Friday, the International Copper Study Group said it now expects a small supply surplus in 2018, after previously projecting a deficit

"The switch to surplus is due to stronger than previously anticipated growth in refined copper production," the group said in a statement with its latest forecasts.

Traders were also reacting to news from U.S. giant Freeport-McMoRan Inc. that its latest spat with the Indonesian government regarding control over the world's second-largest copper mine, Grasberg, hasn't yet affected production. Indonesia recently said it wanted Freeport to meet new environmental standards in just six months, the latest barb in an extended back-and-forth between the two sides.

Another prominent copper producer, Norilsk Nickel, said Thursday that first-quarter copper production rose 18% from a year earlier.

Still, some analysts expect the uncertainty surrounding Freeport's negotiations with Indonesia and labor negotiations at the BHP Billiton-operated Escondida mine in Chile to boost copper moving forward as consumption data from China, the world's largest consumer, picks up steam.

Long-term investors have also been encouraged by the lack of growth projects that could boost copper supply in future years, and the ICSG reiterated Friday that it expects a supply deficit in 2019.

Elsewhere in base metals, aluminum for delivery in three months on the London Metal Exchange declined 2.3% to $2,223 a metric ton, continuing a recent bout of extreme volatility after news that Russian billionaire Oleg Deripaska has agreed to sell down his majority ownership in EN+ Group PLC, the U.K.-listed holding company that owns 48% of aluminum giant United Co. Rusal.

Prices surged Thursday on a Bloomberg report that Mr. Deripaska wants to keep control of the company, potentially creating a standoff with the U.S. government and further disrupting global supplies.

The U.S. has said it might relieve sanctions if Mr. Deripaska sells his stake. Rusal denied the report was accurate, and some analysts think it is a negotiating tactic by Mr. Deripaska to pressure the U.S. or get a better deal if he sells.

The U.S. has hinted it would relieve sanctions if Mr. Deripaska sells his stake. Rusal denied the report was accurate, and some analysts think it was a negotiating tactic by Mr. Deripaska to pressure the U.S. or get a better deal on a sale.

Worries about supply tied to Rusal has jolted the aluminum, palladium and nickel markets this month, but some analysts expect a resolution to calm traders moving forward. Nickel on the LME dropped 2.5% Friday, while the most-actively traded palladium futures in New York shed 1.6%.

Among precious metals, front-month gold for May delivery inched up 0.4% to $1,320.30 a troy ounce from its lowest close in more than a month. Prices have fallen recently with the dollar rising, as a stronger dollar makes commodities denominated in the U.S. currency more expensive for overseas buyers.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

April 27, 2018 15:54 ET (19:54 GMT)

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