Copper prices fall as U.S. election outcome clouds AI demand outlook

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Copper prices fall on US election

Highlights

Copper on the London Metal Exchange fell 0.5 per cent Friday to $13,778 a tonne, down 2.7 per cent for the week amid post-election policy uncertainty.
Goldman Sachs estimates that states set to restrict data centres account for 45 per cent of planned U.S. capacity, raising concerns over AI-linked copper demand.
About 90 per cent of global LME and Comex copper stocks are now in the U.S., as traders anticipate but now question the likelihood of Trump-era tariffs after the Republican defeat.

Market moves and policy signals

As reported by Financial Times, copper on the London Metal Exchange falls 0.5 per cent on Friday to $13,778 a tonne, taking its loss for the week to 2.7 per cent. The decline comes as traders react to a broader retreat in Wall Street technology stocks after the U.S. midterm elections, with investors fearing a political backlash against the rapid buildout of AI infrastructure.

Copper has risen sharply this year as forecasts for AI-linked consumption lifted sentiment across industrial metals. The metal is used across the data centre supply chain, including power delivery, construction, cooling and computing equipment, making it a key proxy for expectations around AI investment.

Goldman Sachs estimates that states where Democratic lawmakers are likely to restrict data centres account for about 45 per cent of planned U.S. capacity. That assessment has added to concerns that policy changes could slow a multitrillion-dollar buildout that had previously supported bullish demand assumptions.

Another factor is the outlook for trade measures. Copper prices had previously climbed after President Donald Trump promised a tariff of at least 15 per cent on refined copper imports at the end of this year, prompting traders to move large volumes into the U.S. to avoid the levies and contributing to shortages in other markets.

Tariff expectations and broader industry outlook

About 90 per cent of copper stocks held in the global warehouse networks of the London Metal Exchange and Comex are now in the U.S., up from about 20 per cent two years ago. Analysts say that concentration reflects the market distortion created by expected tariffs, and some now argue that the odds of those levies being imposed have fallen since the election result.

Ole Hansen, head of commodity strategy at Saxo Bank, says the key short-term driver for copper is what happens to U.S. import tariffs after the Republicans’ heavy election defeat. He says the result lowers the likelihood of tariffs on refined copper and that this change in expectations could weigh more on prices in the near term than any adjustment to the long-term demand outlook.

Deutsche Bank analysts remain constructive on copper, arguing that only a recession would cause a significant price drop. In their view, bearish investors need a recessionary spiral, while bullish investors only need existing demand trends to continue.

They add that Trump still holds executive power to implement tariffs and that removing them would have limited effect on consumer prices, an issue that remains central in the midterm debate.

U.S. toy prices rising ahead of the holiday season were a key sign of how tariffs and energy- and shipping-related costs can filter through to consumers. In our earlier article, we explained that even after some tariff easing, shelf prices can stay elevated because pricing reflects earlier, higher-duty regimes, while fuel, commodities, and logistics disruptions keep costs sticky and continue to squeeze manufacturers’ margins.

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