- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- The End of Summer Sees the End of Disinflation in Europe
- Labor Market Indicators are Starting to Unify on Easing in Hiring
- Inflation and Tight Financial Conditions Weigh on the German Consumer
- Euro Area Money Supply Contracts for the First Time Since 2010
- Dismal Economic Data Out of Germany
- Core Durable Goods New Orders See Gentle Uptrend in July
- More UK Data Pointing to Q3 Decline
- Whispers of a UK Contraction in Q3
- Japan's Core Inflation Resumes Uptrend in July
- Early July Economic Data Leads to a Sharp Increase in Q3 Growth Expectations
- UK CPI: Energy Inflation Crashes but Services Inflation is Still Sticky
- China's Weak Start to Q3 Means More PBoC Easing
- A Breather for the Eurozone as Inflation Hits Two-Year Low
- Germany's September CPI Report: A Clearer Picture of Inflation Trends
- US Manufacturing Demonstrates Resilience Amidst Volatility in August
- The ECB Prepares to Address Excess Liquidity Through the MRR
- Bank of Japan is Too Optimistic on Inflation
- The Bank of England Pauses in a Near Split Decision
- UK Inflation August Update: A Precursor to the Bank of England's Announcement
- Housing Starts Tumble in August Amid Rising Mortgage Rates
- US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year
- US Consumer Prices Surge in August Driven by Energy Costs
- August NFIB Survey Showed a Tough Environment for Small Businesses
- All Signs Point to a Weaker Labor Market in August
- Chinese CPI Trying to Buck the Deflation Trend
- Energy Prices Rise but the Core Disinflationary Trend is Maintained in September
- PPI's Quiet Rise and the Energy Elephant in the Room
- Small Businesses Grapple with Inflation and Financial Strain in September
- A Wacky September Jobs Report Shows Strong Labor Market
- A Look at the Fragile US Labor Market Ahead of the Nonfarm Payrolls Report
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
Metal Demand Has a Bright Future in 2021 and Beyond
January 11, 2021
One of the stories of 2020 was the immensely impressive rise in Tesla’s (TSLA) stock price. Shares of the electric car company rose about 720% as it made headlines month after month and eventually catapulted Elon Musk to become the richest man in the world at the beginning of 2020. The hype surrounding Tesla is representative of a greater overall trend of innovation in green energy. A trend that has transformed from being driven by speculation of what it could become to being driven by demand for the new products being created.
S&P author Jim Wiederhold hints at this in his “Reflecting on the Inflections Points of 2020” reviewing S&P GSCI Sector Commodities and their performance over 2020. The article reports that S&P GSCI Precious Metals and S&P GSCI Industrial Metals were the best performing of the 6 indexes with Precious Metals up over 20% and almost 70% higher than the worst-performing Energy Index. Some Precious Metal highlights were gold and palladium up above 20%, platinum up about 10%, and silver surging 47%. Analysts in a Reuter's article suggest the bull market will continue into 2021 with the potential for these precious metals to reach new highs.
Indeed, the S&P report notes that “green technologies were building momentum for years, but 2020 might be the inflection point where they truly took off.” That inflection point might also be the reason behind TSLA’s wild surge. Both components of the Industrial Metals index and the Precious Metals index are used in “low-carbon technologies” which include wind turbines, solar panels, carbon capture, electric vehicles, and energy storage. The chart from the World Bank illustrates how so many green technologies will rely on the supplies of these metals to flourish. This was highlighted in an in-depth report from 2017 which suggested “The shift to low carbon energy will produce global opportunities with respect to a number of minerals.”
The World Bank’s analysis assumed that the 2015 Paris Agreement on Climate Change and the progressions of the global resolution would lead to a cohesive increase in demand for metals and minerals used in green technologies. It analyzed three different scenarios that suggested there would be an increase in renewable energy generation in the range of 14-44% in the next 80 years. In that same analysis, it suggested some demand for metals could rise by as much as 1000% in that period. In some specific models looking at wind and solar energy, metals including aluminum, chromium, copper, indium, iron, lead, manganese, molybdenum, neodymium, nickel, silver, and zinc could see demand growth of 150% (on the low end) through 2050.
Of course, this was based on an agreement set in 2015 in a time that the global climate crisis didn’t seem as urgent as it does now. Scientists have stated that 75% of current plans in place are inadequate in reaching the goals set by the 2015 Paris Agreement on Climate Change. All signs point to the “inflection point” steepening in 2021 as innovation in the green space continues and green policies continue to encourage more low-carbon technologies to come online.