United States

In the final election analysis, the Republicans made a clean sweep to claim majorities in both the legislative and executive branches. However, the legislative branch majority is slim and a large degree of discipline will be required to invoke change.

Donald Trump will return to office after a four-year gap and is in the process of building his leadership team, with the overarching themes being loyalty and shaking up the system. The headline changes have been around border security, economic protectionism, tax reduction and improvements in government efficiency. Most recently, he has threatened 25% import tariffs on products from Mexico and Canada, where he negotiated a free trade agreement in his first term. Most of the markets seem to be taking developments in their stride and adopting a wait-and-see approach.

There has been stability on the economic front, with inflation still under control, unemployment remaining in the low 4% range and modest GDP growth. The Federal Reserve has lowered interest rates for a second time this year. There is some fear in the markets around proposed import tariffs and how they may spark inflationary pressures if implemented.

As we head towards the end of the year, dealers are in negotiations with aluminium mills. The leverage seems to have moved back into the dealers’ court as proposed spreads are much improved over the course of 2024. The entry of new mills into the marketplace and slower manufacturing activity have tightened supply of recycled-content aluminium, and there does not seem to be any relief in sight. Primary aluminium prices have remained in the same range as for the last three months. Most analysts are expecting an increase in the regional premium as a 25% tariff on Canada will affect the significant aluminium imports coming from that country. Secondary aluminium ingot prices have also continued to be stable, with scrap prices remaining in line. Secondary scrap items are currently in reasonable balance.

As year-end approaches, a drop in demand is expected as consumers reduce inventory to meet annual goals. Demand and spreads for brasses and copper have not changed since the previous report.