Consequently, consumption of the red metal for passenger EVs is projected to increase by nearly 700% over the next two decades.Ī key to this bullish demand forecast is China, which was ranked #1 in the world among countries most heavily involved in the lithium-ion battery supply chain. It’s also worth mentioning that copper was one of the best-performing commodities over the last few years and stands to benefit from continued strong demand in the coming months and years-both from China’s resurgent industrial economy as well as from recovering automobile sales.Īlong these lines, the research consultancy Wood Mackenzie has noted that copper “is a cornerstone of the EV revolution” and is heavily used in charging stations and other EV applications due to its high electrical conductivity, durability and malleability. And while conventional cars use around 18-to-49 pounds of copper, EVs typically contain around 85 pounds. One way to participate in the steel bull market is through the VanEck Vectors Steel ETF (SLX), which seeks to replicate the price and yield performance of the NYSE Arca Steel Index (STEEL)-and which in turn is intended to track the performance of companies involved in the steel sector.Ī vast majority (86%) of steel buyers were polled last November by an industry source expecting another round of price increases from steel mills, and the likelihood is that prices will continue to rise, which should bode well for SLX.īase Metal ETF #2: United States Copper Index Fund (CPER)Īlong with steel, EVs also need lots of copper and can utilize up to three-and-a-half times as much of the red metal compared to a traditional gas-powered passenger car. Prices have cooled off since then but remain above $800/ton, more than 50% higher than the pre-pandemic level of $570 in March 2020 before the nationwide shutdowns began. To give you some idea of just how much higher prices are, the price for benchmark hot-rolled steel reached as much as $1,500/ton over the summer last year. manufacturers, just months after preparing for a long, pandemic-driven slump in steel demand.” And automakers are a big reason for the increased demand, which has pushed steel prices significantly higher.īase Metal ETF #1: VanEck Vectors Steel ETF (SLX) According to the Wall Street Journal, “Steelmakers straining to keep up with resurgent orders from U.S. Indeed, steel production is on the upswing again after mill closures caused by COVID-related shutdowns. The latter is the starting point for EV manufacturing and is increasingly used instead of aluminum for the production of the vehicle’s body and chassis (though aluminum remains a key material for battery production due to its lower weight). Ives believes China will likely see tremendous EV demand in 2023 and beyond, with Nio, Li and XPeng (XPEV) all poised to benefit, while Tesla’s Shanghai-based Gigafactory 3 (which does final assembly for the Model 3) enjoys a competitive edge.Īmong the metals most commonly used in EV production are copper, lithium, nickel, and steel. One of the hottest trends is the resurgence of the global market for industries that are heavy consumers of metals, particularly the electric vehicle (EV) market.Īccording to Wedbush Securities analyst Dan Ives, there’s currently a “ major inflection” in the worldwide demand for EVs, with vehicle makers like Nio (NIO), Li Auto (LI) and Tesla (TSLA) vying for the top spot. Here we’ll examine some top base metal ETFs. Rising demand, a reopening China, and tightening supplies for the materials used in these (and other) industries have boosted the year-ahead outlook, with metals like copper, aluminum, nickel, and lithium poised to benefit. The global base metals market is in full-on recovery mode after a rough few years, led by a rebound in the automotive and construction industries.
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