Australian executives see positives for metal demand if Biden wins

Perth — A change of US president would likely result in a stimulus package that would support metal demand, while it could also help smooth currently fraught relations between Australia and China, executives at a resources conference in Perth, Western Australia, said Nov. 5-6.

At the time of writing the US election had yet to be decided, but many analysts and commentators were expecting a win for Joe Biden.

Speaking at the annual Africa Down Under conference, BDO Global Head of Natural Resources, Sherif Andrawes, said economies recovering from the pandemic would need to lift infrastructure stimulus, noting "all the things that need to go into infrastructure will be in demand for longer periods."

He said the US would "need the inputs in commodities to satisfy their stimulus, so demand will only increase in the US."

Andrawes said a prospective round of global infrastructure stimulus was driving the ability of mining companies to raise money and list on the Australian Securities Exchange.

He said that if Joe Biden became US president the Australian government may be more amenable to better relations with China, which could support Australian trade.

With Trump in power, Australia may have felt like it had to support the US by making negative public statements about China, "whereas with Biden in power, [Australia] may take a step back and play nice with China", he said.

Barclays Australia managing director Paul Early said his "personal view" was that "most people think that there will be some form of stimulus that comes out [from the US Federal Reserve], and that it should be positive for commodities and mining generally, either way [the election] goes, and the market is reacting that way."

This echoed comments from an analyst note from Australia's Westpac Bank on Nov. 6.

While the Democrats seem likely to win the White House, Westpac noted that the Republicans would continue to control the Senate, so "prospects for a jumbo fiscal stimulus in the US have therefore faded, implying a further round of policy stimulus from the Federal Reserve."

"Markets are therefore likely to factor in a weaker US dollar, particularly against the currencies of the Asian region, including the Australian dollar, which is still on track to reach A$0.75 ($0.54) by year's end," Westpac said.

China has restricted imports of Australian metallurgical coal in recent weeks, and there are some reports it has done the same with copper ore and concentrate, though Chinese participants told S&P Global Platts they were unaware of any ban on Australian copper imports.

China is unlikely to place similar restrictions on iron ore given Australia supplies around 60% of China's imports.

Barclays' Early said that copper was "relatively fungible" as a commodity, and there were enough refiners outside of China to ensure Australia's copper will find a home.

This echoed West Australian copper producer Sandfire Resources CEO Karl Simich's comments to S&P Global Market Intelligence on Nov. 4 that his company could easily sell its product to countries such as Japan, Taiwan, South Korea and India.

"There's no doubt that China drives the commodity market; the rest of the world is not exactly in a great state yet; commodity prices are going up and we think it's being driven by demand from China," Early said in an interview with Market Intelligence.