LAUNCESTON, AUSTRALIA – Beyond the short-term volatility as investors become used to the idea of President Donald Trump, the main risk for global commodities is how much of the campaign rhetoric translates into policy reality when the Republican victor moves into the White House.
The problem global commodity markets are currently grappling with is that the new U.S. president hasn’t articulated well-defined policies, rather his campaign was a series of slogans, threats and somewhat vague promises.
Nonetheless, there is enough to suggest that Trump’s presidency holds both positives and negatives for commodity demand and prices. Much of the focus so far has been on what his domestic energy policies will bring, but whatever changes will be much more of an issue within the United States and will likely only have a limited impact on the rest of the world.
His stated aim is to allow the market to decide which energy sources it will use, and to free up exploration, production and transportation from red tape.
On the surface that would be positive for oil and natural gas output in the United States, perhaps less so for coal as it would struggle to compete with higher, and likely cheaper, natural gas output.
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