Two interesting tables from ZeroHedge. First, is the projected increase in supply of key critical materials needed to achieve global net zero increase in CO2 emissions (NZE) by 2040:
Second, is the expected supply shortfall by 2030:
Industrial Metals are currently in a bear market, with DJ Industrial Metals Index ($BIM) testing long-term support at 150. Breach would offer a target of 110.
Conclusion
Now may not be an opportune time to accumulate critical materials stocks but keep watch. Sooner or later, demand growth is likely to resume — as electrification and EV sales grow — leading to a supply shortfall as projected in 2030 above.
Acknowledgements
- Energy Transitions Commission: Material and Resource Requirements for the Energy Transition, July 2023
- ZeroHedge: Skyrocketing Battery Mineral Demand Set to Outpace Supply By 2023, February 14, 2024
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.