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Copper Falls Below $9,000 as Dollar Extends Post-Election Gains

Bars of copper in a storage area at the Valjaonica Bakra Sevojno AD copper mill in Sevojno, Serbia, on Tuesday, Oct. 26, 2021. For months, the copper market has been caught in a tug of war between steadily shrinking supplies on one side, and an increasingly strained global economy on the other. Photographer: Oliver Bunic/Bloomberg (Oliver Bunic/Bloomberg)

(Bloomberg) -- Copper fell below $9,000 a ton for the first time in two months as the dollar extended gains made in the wake of the US election.

Futures on the London Metal Exchange have dropped almost 9% since Nov. 5. The re-election of Donald Trump to the presidency has spurred gains in the greenback as traders bet on tighter-for-longer Federal Reserve policy.

Trump has promised to raise tariffs and cut taxes, both of which may add to inflationary pressure. The risks were underlined Wednesday, when an index of US consumer prices showed its first acceleration on an annualized basis since March.

“The reality is we’re likely finding a new range given a repricing in the dollar,” Nicholas Snowdon, head of metals research at Mercuria Energy Trading SA, said at CRU Group’s World Copper Conference in Shanghai. “But the structural story is not dead. It is still very much alive and we do see that starting to prevail more through the mid to second half of next year.”

Copper has retreated since hitting a record high in May amid concerns about demand recovery in China, the world’s top metals consumer. Enthusiasm about Beijing’s pro-growth pivot has cooled as investors look for clearer signs that the government will roll out more policies — such as infrastructure investment — that will boost commodities demand. 

Traders are watching the impact of China’s latest economic stimulus measures. Industrial output and retail sales in the world’s top metals consumer are expected to have grown at a faster pace in October than September, according to economists surveyed by Bloomberg. Those data are due Friday.

Copper declined 1.8% on the LME to $8,882 a ton by 11:15 a.m. local time. Most other metals were lower, with zinc down 3.2% and aluminum 0.8% lower. The Bloomberg Dollar Spot Index advanced 0.4% to a fresh two-year high.

--With assistance from Katharine Gemmell, Andrew Janes and Jack Ryan.

©2024 Bloomberg L.P.