Copper prices rose slightly on Monday after last week’s steep losses on a strong dollar after Donald Trump’s victory in the 2024 US presidential election. The dollar surged on Wednesday after Trump’s victory, which weighed on prices of most commodities. A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers. Meanwhile, Chile’s state-run Codelco increased copper production by 5.2% on a year-on-year basis in September. This further pressurised prices in the copper market on Friday. However, prices were slightly higher in Monday’s session as investors resorted to lower-level buying.But, prices remained lower compared with their recent highs even as China unveiled a stimulus package on Friday, which underwhelmed the metals market.Additionally, copper production rose in September, which added to the bearish sentiment in the market.At the time of writing, the three-month copper contract on the London Metal Exchange was $9,458.50 per ton, up 0.2% from the previous close. China trade tensionsAs Trump is set to take office at the White House, renewed concerns over trade relations with China resurfaced. Trump is likely to increase tariffs on all imported goods from China, which is likely to affect its exports to the US. China is one of the top exporters of base metals and the largest consumer as well. Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report:
Finally, there are concerns that a US President Trump could slow the transformation of the US energy sector, which would also dampen demand for copper.
The fact that Trump is likely to slow down the decarbonisation process by rolling back several climate regulations passed under President Joe Biden could further dampen demand for copper. Codelco’s production risesAccording to data from Chile’s copper commission Cochilco, Codelco increased production by 5.2% on a year-on-year basis to 123,100 tons in September. Production at Escondida, the world’s largest copper mine, dropped 5.4% to 101,500 tons. But, Collahuasi, another top mine, produced 51,400 tons of copper, up 14% from last year. Codelco has been struggling to lift its output in 2024 after registering a 25-year-low in 2023, largely due to a number of accidents and management missteps, Reuters said in a report.In July, Codelco had said that copper production targets would be difficult to achieve in 2024. But, the company’s Chairman Maximo Pacheco said production would pick up in the second half of the year. Pacheco said that October was the company’s best month so far and it was able to exceed its target, according to Reuters. China announces stimulus packageOn Friday, China’s National People’s Congress concluded its week-long meeting with a press conference where it announced a package worth $1.4 trillion to alleviate local government debt issues. The meetings were pushed to this week from October, allowing policymakers to be more agile with the major catalysts from the US election and Thursday’s Federal Reserve’s meeting. Analysts at ING Group said:
The initial market response appears to be negative; one potential impact of a Trump victory on China was its potential impact on the stimulus response, and markets may have been hoping for a larger-than-expected stimulus.
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