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The U.S. presidential election is a moment of great significance not only for American domestic politics but also for the global economy.
The victory of Donald Trump or Kamala Harris could lead to diametrically opposed economic and trade policies, with significant consequences for the nonferrous metals market, a sector closely linked to the dynamics of foreign policy, infrastructure investment, and industrial strategies of major global players.
Let’s see how the two possible victory scenarios could affect the major nonferrous metals: copper, aluminum, nickel, lead, and zinc.
Scenario 1: Donald Trump’s Victory
1.Copper ⇑
Copper is critical to a variety of industries, from construction to technology. A Trump victory could lead to reduced environmental regulations and support for more traditional industries such as automotive and construction, sectors where copper is a primary resource.
- Infrastructure development: Should Trump make good on his promise to increase infrastructure investment (as he did during his first presidency), demand for copper could see a significant increase in the United States. Construction, power grids, and transportation require significant amounts of copper, making the market more dynamic and increasing pressure on production and extraction.
- Protectionist policies: Trump has already been shown to favor protectionist policies in the past, such as tariffs imposed on imports from China. Any victory by him could lead to new protectionist measures that would affect the global copper supply chain, leading to higher prices due to supply difficulties.
2. Aluminum ⇑
Aluminum, which is widely used in construction, transportation, and consumer goods production, is strongly affected by U.S. trade policies, especially since a significant portion of the aluminum used in the U.S. is imported.
- New duties on imports and increased domestic production: It is likely that Trump, as he has in the past, will implement new measures to protect domestic production by imposing additional duties on aluminum from countries such as Canada or China. This would lead to higher prices for domestic users, but could favor U.S. producers and a potential uptick in local production.
- Reduction in environmental regulations: A new Trump presidency could further reduce environmental regulations, making it easier to mine and process aluminum on U.S. soil. However, such a policy may not be sufficient to balance the difficulties U.S. producers would face in the global market, where competitors are supported by lower-cost production.
3. Nickel ⇓
Nickel is an essential component for the stainless steel industry and for batteries, particularly in electric vehicles.
- Limited focus on renewable energy: Trump has often prioritized fossil fuels over renewable energy and, consequently, electric mobility. This could lead to a slowdown in the development of electric vehicles in the United States, reducing demand for nickel used for batteries and affecting global markets to some extent.
- Possible dollar devaluation: Trump’s protectionist approach and trade tensions could lead to a devaluation of the dollar, making nickel more accessible in external markets. This could spur greater international demand, generating potential price increases for producers.
4. Lead ⇑
Lead, widely used in traditional batteries, has come under pressure from the shift to cleaner energy sources.
- Support for traditional industries: Trump, by supporting the traditional industrial sector, could slow the adoption of renewable energy and electric mobility, elements that would affect lead demand in the long run.
- However, his pro-industrial policy could encourage increased demand from sectors such as construction, which continue to use lead in various applications.
5. Zinc ⇑
The automotive and construction industries, major consumers of zinc, could benefit from a pro-industrial Trump policy.
- Increased construction activity: If Trump decides to incentivize infrastructure projects and industrial production, demand for zinc for galvanizing steel (used to protect structures from corrosion) could rise, leading to rising domestic demand and price pressure.
Scenario 2: Kamala Harris’s Victory
1. Copper ⇑⇑
Kamala Harris has clearly expressed her commitment to a low-carbon economy and an increased focus on sustainability.
- Strong push on renewable energy and electrification: A Harris presidency could increase investment in renewable energy and electric mobility. This, combined with policies to modernize infrastructure, would stimulate significant growth in demand for copper, used in electric vehicles and power grids. This increase in demand could generate rises in copper prices globally.
- Trade stability: Unlike Trump’s protectionist approach, Harris could promote more open and cooperative trade relations, reducing tensions in international copper markets and fostering greater price stability. However, growing demand for green and infrastructure projects could still put pressure on the market.
2. Aluminum ⇑
Aluminum, essential for infrastructure and electric mobility, would likely see growth in demand under a Harris presidency.
- Support for renewable energy and the green automotive industry: Harris could promote policies to incentivize the production and use of electric vehicles, thereby increasing demand for lightweight aluminum to build more efficient vehicles. Automakers could benefit from incentives to reduce emissions by pushing aluminum consumption.
- Possible increased environmental regulation: Harris could implement stricter regulations for aluminum mining and production, which could limit domestic production, leading to increased imports and likely higher prices in the domestic market.
3. Nickel ⇑⇑
The push for greater electrification and a green transition would boost nickel demand.
- Increased incentive policies for electric vehicles: If Harris succeeds in incentivizing electric vehicle production, nickel demand for batteries would be pushed up, especially in a market already subject to potential supply tensions. This could generate significant pressure on prices, potentially increasing demand for high-quality nickel for batteries.
4. Lead ⇓⇓
The move toward green energy and electrification could gradually reduce demand for lead.
- Reduction in use in conventional batteries: If Harris focuses on the transition to electric vehicles, the demand for lead-based batteries for conventional vehicles could decrease. However, lead would continue to play a role in backup batteries for renewable energy infrastructure.
5. Zinc ⇓
An incentive program for environmentally sustainable construction could affect zinc demand.
- Sustainable infrastructure and network expansion: The construction of new sustainable infrastructure would likely increase demand for zinc for galvanizing metal structures, as it is one of the ideal materials to prevent corrosion. Increased demand for zinc could lead to higher global prices.
Comparison Industrial Metals – Copper – Aluminum – Zinc – Nickel – Lead – LME Prices – 3 month $/ton – Powered by Commodity Evolution
Conclusion
The 2024 U.S. election promises to have a significant impact on the global nonferrous metals market, with consequences that could shape the future of the industry.
Donald Trump’s victory would lead to a traditional industry-centric approach, with protectionist policies and incentives for infrastructure and sectors such as automotive and construction, generating stable demand for materials such as copper and zinc, but possibly slowing the adoption of renewable energy.
On the other hand, Kamala Harris’s victory would represent a push toward electrification and sustainability, spurring growth in demand for metals essential to the green transition, such as copper, aluminum, and nickel, but with increased environmental regulation.
Whatever the outcome, it is clear that the nonferrous metals market will have to adapt to new economic policies and strategies.
The ability to respond flexibly to such complex changes will be critical for key industry players. Companies operating in this sector will therefore need to remain agile and informed about policy dynamics and regulations in order to seize opportunities and mitigate risks in an increasingly interconnected environment between the economy, the environment, and global trade.