China trumps Trump over outlook for industrial commodities – by Clyde Russell (Reuters U.S. – November 14, 2016)

LAUNCESTON, AUSTRALIA – The election of Donald Trump as U.S. president has added froth to prices for metals and bulk commodities, but the real driver is, and will remain, the outlook for China. While price volatility associated with the somewhat surprising election of the brash real estate mogul was always likely, hopes for a Trump-led revival of industrial commodities and coal look way too optimistic.

Even if Trump can deliver a massive stimulus package as promised when he takes occupancy of the Oval Office in January next year, this alone would unlikely be enough to justify some of the extreme optimism now being priced into commodities.

The market also seems to be ignoring the threat to commodities posed by Trump’s stated trade protectionism, with the possibility of higher tariffs on Chinese goods probably a greater downside risk than the upside potential of a Trump stimulus program.

Is the outlook for copper now so strong that it deserved to enjoy its best week since 2011? The London benchmark reached $5,601 a tonne on Nov. 10, its highest close in 16 months. While profit-taking saw the price slip back to $5,549 a tonne on Nov. 11, the industrial metal is still almost 20 percent higher than the $4,635 it closed at on Oct. 21, its most recent trough.

While the election on Nov. 8 that delivered the White House to Trump may have acted as a spur to copper, it’s also clear that the red metal was rallying fairly hard before the Republican candidate’s victory over more-fancied Democrat Hillary Clinton.

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