Blog

INVESTING INSIGHTS
AT WILLIAM BLAIR

February 14, 2024 | Emerging Markets Debt
Metals of the Future: Demand Dynamics in the Driver’s Seat

Corporate Credit Analyst

Alexandra Symeonidi, CFA, is a corporate credit analyst on William Blair’s emerging markets debt team. In this role, she covers the Europe, Middle East and Africa (EMEA) oil and gas, metals and mining, industrials, and utilities sectors. Before joining William Blair, she was a credit analyst on NN Investment Partners’ EMD team. Before joining NN Investment Partners’ EMD team in 2018, she worked on the firm’s multi-asset and performance measurement teams. Alexandra received a B.S. in economics from Athens University of Economics and Business and an M.Sc. (cum laude) in finance and investments from Erasmus University’s Rotterdam School of Management.

Print Friendly, PDF & Email

In the two years since we published our research on electric vehicles (EVs) and metals, we’ve seen a dynamic metals market unfold before our eyes.

The copper, lithium, and nickel markets are undergoing a rapid transformation, driven by the green energy revolution, which has spurred investments and innovation to meet the growing demand of EVs and renewable energy.

In this blog post series, we explore how supply and demand for some of these “commodities of the future” have been shaped by the transition to a low-carbon future. We also explore governmental responses from emerging markets (EMs) to these shifting dynamics.

Let’s start with demand dynamics, where the energy transition from traditional fossil fuels to renewable resources, as well as the electrification of several global economic sectors, is now evident in the demand for copper, lithium, and nickel. Investments in electric grids worldwide have accelerated in the last couple of years as a result of investments in renewable power systems and the infrastructure needed to support the electrification of transportation and other sectors.

Copper

According to the International Energy Agency (IEA), global investment in electricity grids increased around 8% in 2022.

China has led this growth, with investments in grid and infrastructure up 28% year-over-year from January to October 2023. Chinese demand for copper now constitutes 60% of the world total. While demand for all copper uses is higher than historical records, demand for wire, which has multiple uses in the grid and EV infrastructure, has significantly outperformed demand for other copper uses in China.

In Europe, EV sales continue to advance, with EV registrations recording a whopping compound annual growth rate (CAGR) of 55% from 2017 to 2022. Grid and infrastructure investments, coupled with EV adoption, constitute the largest consumers of copper worldwide, strengthening copper demand resilience in the face of current economic challenges.

Lithium

Among all commodities of the future, lithium has probably undergone the greatest transformation. The electrification of transportation has driven a colossal shift in the demand composition for lithium, which had a CAGR of 23% from 2017 to 2022. EV batteries are the biggest contributor to this dynamic, now representing more than 50% of total demand for lithium (up from about 30% in 2017). Other uses of lithium include consumer electronics (which use lithium-ion batteries), glass making, ceramics, and pharmaceuticals.

Nickel

Nickel demand has been accelerating in the last three years. It grew 11% in 2022 and is expected to grow another 14% in 2023. For context, demand growth for most industrial metals is comparable to global annual gross domestic product (GDP) growth, which has been much lower than the double-digit growth experienced in nickel. This growth is a result of nickel being used as a component of EV batteries. The composition of nickel demand has been changing too. Clean energy now constitutes 16% of total demand, up from just 6% in 2017.

In my next post, I’ll discuss supply dynamics, as the response to the very pronounced demand shifts observed in these metals has been remarkable.

Alexandra Symeonidi, CFA is a corporate credit analyst on William Blair’s Emerging Markets Debt Team.

Want more insights on the economy and investment landscape? Subscribe to our blog.

 

Metals of the Future 2.0 Series

Metals of the Future: Demand Dynamics in the Driver’s Seat

Metals of the Future: Can Supply Meet Demand?

Metals of the Future: Capturing a Share of the Pie

Corporate Credit Analyst

Alexandra Symeonidi, CFA, is a corporate credit analyst on William Blair’s emerging markets debt team. In this role, she covers the Europe, Middle East and Africa (EMEA) oil and gas, metals and mining, industrials, and utilities sectors. Before joining William Blair, she was a credit analyst on NN Investment Partners’ EMD team. Before joining NN Investment Partners’ EMD team in 2018, she worked on the firm’s multi-asset and performance measurement teams. Alexandra received a B.S. in economics from Athens University of Economics and Business and an M.Sc. (cum laude) in finance and investments from Erasmus University’s Rotterdam School of Management.

Related Posts

Subscribe Now

Want the latest insights on the economy and other forces shaping the investment landscape? Subscribe to our blog today.

Left Menu Icon
 

Subscribe to Our Blog Now

Want the latest insights on the economy and other forces shaping the investment landscape? Subscribe to our blog today.

SIGN UP