The 100-day mark for President Donald Trump’s administration has come and passed. When it comes to the effects of his policies on various markets, only one thing is certain: uncertainty.
That uncertainty also applies to non-ferrous metal markets, which saw a boom in optimism after Trump’s election last year. For example, copper rose to a 15-month high on Nov. 9, 2016. However, that optimism has dwindled through the first few months of his administration, due to lingering uncertainty over the administration’s ability to actuate campaign promises.
While market fluctuations are a confluence of many forces, beyond what the president does or does not do, the president does have substantial influence, both in word and deed. Thus far, Trump has been more influential in the former, campaigning on a renewed focus on mining (particularly with respect to coal) and significant investment in American infrastructure.
“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump had said during his victory speech in November. “We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”
In short, this signaled an imminent demand for valuable metals, like aluminum, zinc and copper. In March, U.S. Transportation Secretary Elaine Chao said the Trump administration would unveil a $1 trillion infrastructure plan later this year. The specifics of the plan have yet to be released. In addition, the tax reform proposal released by the administration on April 26 did not account for money targeted for infrastructure spending, leading to doubts over Trump’s commitment to his infrastructure promises from the campaign trail.
In the short term, this puts the markets for domestic demand in a holding pattern, which has chipped away at market optimism after the positive surge on the heels of Trump’s surprise victory.
Uncertainty, however, is not just limited to the administration’s domestic policies.
Recently, the Trump administration ordered an investigation into aluminum imports from China and other countries, citing security concerns. In an attempt to protect U.S. companies from the flood of cheaper imports, it is unclear whether the country’s metal needs can be met domestically. According to Commerce Secretary Wilbur Ross, the Century Aluminum smelter in Hawesville, Ky., which produces high-purity aluminum, could probably meet peacetime needs, but not if the country needed to increase production to meet wartime needs, The Guardian reported.
In a time of increasing tension aimed at North Korea, the need for increased domestic production amid trade barriers aimed at China and other countries might ultimately have a deleterious effect on American producers, which may not have the capacity to meet needs.
Ultimately, after 100 days, more is uncertain than certain. That uncertainty, with respect to geopolitical tensions and large-scale legislation that remains vague and merely planned, will continue to have negative effects on the stability of non-ferrous markets. That can be seen in the copper market, which has seen numerous up and downs in recent months — a product of many things, including Trump policy, as well as the economic growth of China, which accounts for more than 40% of global copper consumption.