Theglobal energy transitionis driving demand for raw materials such ascopperandaluminum, as well asoil. Its performance in the first few months of the year has outperformed the major stock market indices. The price of a barrel of Brent crude, for example, has risen40%so far this year alone,while the price of itsTexascounterpart has climbed nearly42%.
Oil isn't the only commodity skyrocketing after an "annus horribilis" caused by the pandemic.Copperis experiencing a golden age thanks to the global energy revolution, now that China and the U.S. have joined Europe in the green transition.
The fact is that 45% of this metal is used in construction and 20% in electronics, but in the long term it stands to benefit from this technological shift, as it is key to components used in batteries, solar power, wind power, and electric vehicles, according to an analysis byBen Laidler, Global Markets Strategist at themulti-asset investment platform eToro.
Rare Earths and Aluminum
With governments investing recovery funds in infrastructure and green energy projects,it is clear that the world is experiencing a boom in raw materials. It’s like a return to the Stone Age—but with aluminum and rare earth elements. This phenomenon could boost global finance, but it could also fuel inflation.
Accordingto the CEFA expert,this is the case inChina. The Asian giant’s control of the pandemic has allowed it to grow at a rate of 2.3% in 2020, with year-over-year growth of 6.5% in the last quarter of the year. Much of this progress was driven by its industrial strength, which relies heavily on raw materials, primarily industrial metals.
Given all this, he notes, it will be crucial to monitor and evaluate the measures and reforms that may be implemented in these countries in the coming months, as they will have significant implications from a supply-side perspective.
"It's also worth noting the shortage of sulfuric acid on the market," says Diego Morales. The availability of this compound on the market has declined due to the slowdown inoil refiningduring the pandemic—a process that generatessulfur, a key component of sulfuric acid.
The extraction of raw materials is subject to political uncertainties, while demand will depend not only on the progress of the green transition but also on energy infrastructure plans.
Via: EL Español
