LONDON: Copper prices tumbled on Wednesday as victory for Republican Donald Trump in the US presidential election spurred concerns that major electrification initiatives would be rolled back, dampening demand for the highly conductive metal.
Three-month copper on the London Metal Exchange (LME) was down 3.6% to $9,391 per metric ton during official rings, its lowest in 48 days. It fell through the 21-day, 50-day and 100-day moving averages. The copper market is pricing in the long-term direction of Trump’s policies, a trader said.
Trump said he would “rescind all unspent funds” under the Inflation Reduction Act (IRA), the Biden-Harris administration’s signature climate law to decouple the global supply chain from China. The IRA includes hundreds of billions of dollars in subsidies for electric vehicles, solar and wind energy, and increasing production of strategic minerals.
It was seen as an incentive boost for investments in lithium, copper and nickel outside China. A Trump victory could also derail US policy in resource-rich Africa. Biden’s administration planned to nearly double its financial commitments in the copper belt of the Democratic Republic of Congo, the world’s second biggest copper producer.
To encourage local manufacturing, the president-elect has also threatened to add a 60% blanket tariff on US imports of Chinese goods. That could quicken factory relocation out of China, which smelts almost half of the world’s copper.
“If everything got derailed, it’s time for us to re-evaluate the copper demand-supply expectations,” the trader said. For other metals, zinc lost 4% to $2,978 to be the worst performer of the base metals complex.
The galvanising metal prices declined as China’s steel industries could face headwinds as Trump pledged to boost local US manufacturing. LME aluminium dropped 2.8% to $2,587 a ton, nickel dropped 1.5% to $15,875, lead dropped 0.5% to $2,018, and tin fell 3.2% to $31,300. Pressuring metal prices was a stronger dollar.
The currency was set for its biggest one-day rise since March 2023 as investors returned to so-called “Trump trades”, making dollar-priced metals more expensive for other currency holders.