Spot copper prices are hovering around $6.4 per pound on Wednesday as markets react to the Midterm elections, which triggered a risk-off sentiment. The year's defining trend for copper has been cross-market arbitrage, driven by the potential U.S. tariff on refined-copper imports. This tariff has drawn significant metal into the U.S., keeping Comex futures at a premium to LME prices. The gap between these markets briefly narrowed on Wednesday but then rebounded, leaving Comex about $100 a ton above London by mid-morning.
The political landscape has shifted with a Democratic Congress, which may not necessarily kill the copper tariff. President Donald Trump, facing legislative gridlock, could turn to executive trade powers. This could separate U.S.-focused Freeport-McMoRan (NYSE:FCX) from the rest of the Global X Copper Miners ETF (NYSE:COPX). James M. Dorsey, a senior fellow at the S. Rajaratnam School of International Studies, described the election result as a rebuke of cost-of-living pressures and inflation. He noted that Trump's legislative period is effectively over, but the White House mood is reportedly defiant.
Democrats have their own levers to influence copper markets. Tighter scrutiny of the AI sector under a Democratic Congress could pressure copper demand despite short-term price swings. ING economist James Smith highlighted that trade is a power the president can wield unilaterally. A U.S. tariff would lift Comex prices relative to global benchmarks, shielding domestic producers like Freeport-McMoRan. The company has already approved a $4.5 billion expansion of its Bagdad mine in Arizona, aiming to more than double its mining and milling rates.
Freeport's expansion project is expected to add about 115,000 metric tons a day of processing capacity, raising long-term copper output above 400 million pounds a year. The company anticipates a 20% reduction in unit net cash costs, supported by the mine's reserve life of over 80 years and its autonomous haulage fleet. Initial production from the expansion is targeted for mid-2030.