Davos Update: Commodity Prices Unlikely to Let Up

Commodity prices unlikely to ease in the near future because of years of under investment in metals needed for energy transition, supply shocks and high energy prices, experts said during World Economic Forum in Davos. Adding to the equation covid related logistics issues and demand for transparency on sustainability, a perfect storm has been brewing in commodity markets.

Analysts say this perfect storm could carry on for the next 30 years. As an example, copper prices are expected to rise 20% by the end of 2022.

The rise in commodity and metal prices are in part a result of transition to a lower carbon, which company executives and analysts say is inevitable despite a recent resurgence in fossil fuels. They believe this recent resurgence is temporary, and energy transition will need a projected $50 trillion investment in the next three decades.

For the mining industry, between $200 billion and $300 billion investment will be required a year in order for the energy transition to be fed. Much of this investment will be needed for copper, nickel, cobalt and other metals.

High prices and supply chain pressures will push companies and countries to stockpile strategic raw materials including oil, copper, cobalt and other metals.

Even small supply disruptions could result in sharp increases in prices. A price impact in the second half of 2022 is likely.

Major end users of metals, such as the automotive industry, are working to secure long term supplies of lithium and cobalt at current market prices.

However, to secure supplies of these metals is very difficult, especially for materials that are clean from an ESG point of view.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

UK Lifts Moratorium on Fracking to Secure Energy Supply

Britain’s new government officially lifted a ban on hydraulic fracturing (fracking) for shale gas, which had been in place since 2019, after Prime Minister Truss made a commitment shortly after taking office earlier this month. The ban was put in place after the country’s upstream oil and gas regulator highlighted the difficulties in predicting the probability or magnitude of earthquakes linked to fracking operations.

U.S. Oilfield Companies Working to Revive Venezuelan Crude Output

Some U.S. oilfield companies whose operations in Venezuela were frozen due to sanctions have cooperated for an appeal to Washington to receive authorization to restart drilling in the Latin American nation. Venezuela could ramp up crude production quickly above 1 million barrels per day (bpd) if the companies are given authorization. 

Ever-Growing Demand for Rare Earths Highlights Africa’s Potential

The global demand for rare earths does not seem likely to slow down as countries around the world pledge to zero-emission goals. Rare earths comprise of 17 minerals that are used for manufacturing of smartphones, electric vehicles (EVs), military weapons systems, and many other advanced technologies. To mine these, Africa has come in the spotlight with its promise of large, high-grade deposits of rare earth metals. Thanks to cheap labor and weak regulations, China has achieved to secure mining deals across the continent for almost three decades. Currently, the global annual demand for rare earth elements (REEs) is largely met by China, which has devoted itself to increasing its presence in Africa guaranteeing ambitious energy and technological transitions. And even with the abundant availability of rare earth deposits in southern and eastern African countries, the region has not yet reached its full potential. 

Stay informed

error: This content is protected !!