Copper tumbles as Trump victory sparks fear over slowdown in energy transition

LONDON: Copper prices tumbled on Wednesday as victory for Republican Donald Trump in the U.S. 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) fell 2.3% to $9,518 per metric ton by 1111 GMT. It has dipped below the 21-day and 50-day moving average and is the worst performer of the base metals complex.

The copper market is pricing in the long-term direction of Trump’s policies, a trader source 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 (EV), solar and wind energy to increase production of strategic minerals at home. It was seen as an incentive boost for investments in lithium, copper and nickel outside China.

Copper firms to three-week high on weaker dollar before election results

A Trump victory could also derail U.S. policy in resource-rich Africa. Biden’s administration earlier planned to near double its financial commitments in the copper belt of the Democratic Republic of Congo (DRC), the world’s second biggest copper producer.

“If everything got derailed, it’s time for us to re-evaluate the copper demand supply expectations,” the source added.

For other metals, LME aluminium dropped 0.9% to $2,636 a ton, nickel rose 0.1% to $16,140, zinc lost 1.9% to $3,044, lead rose 0.3% to $2,033 and tin fell 1.5% to $31,850.

Pressuring metal prices is a stronger greenback. The dollar index jumped to a four-month high as investors returned to so-called “Trump trades”, making greenback-priced metals more expensive for other currency holders.