Electric Vehicles, Sixfold Increase in Mineral Input... Will Metal Prices Rise Further with Green Energy Transition?

[Asia Economy Reporter Ji Yeon-jin] As countries around the world transition to eco-friendly energy, metal demand is expected to increase significantly next year.

According to the '2022 Research Outlook Forum' published by Hana Financial Investment on the 14th, energy systems powered by eco-friendly energy technologies have a higher metal dependency than traditional fossil fuels. Metals with sharply increasing demand during the eco-friendly energy transition phase include copper, nickel, cobalt, and lithium. Under the 2050 carbon neutrality scenario, the total demand for copper and nickel is estimated to increase approximately twofold and fourfold, respectively.

In fact, electric vehicles require about six times more minerals than internal combustion engine vehicles. With the expansion of electric vehicle adoption policies and performance improvements in various countries, global electric vehicle deployment is rapidly increasing. Given the aggressive promotion and investment in eco-friendly policies by the United States, the European Union (EU), and China, the demand for industrial metals is expected to remain robust in the long term.

However, raw material exports are concentrated in a few countries, and supply is significantly affected by each country's production capacity and political uncertainties. Kwon Kyu-yeon, a researcher at Hana Financial Investment, explained, "Copper production is led by Chile and Peru, but Chile has experienced supply disruptions due to long-term union strikes, and Peru has faced supply issues due to road blockades around mines." He added, "Due to China's power shortages, smelter operating rates have declined, reducing inventory levels and maintaining tight supply and demand for industrial metals such as copper and nickel."

Concerns are growing that rising raw material prices, supply chain disruptions, and housing costs are driving inflation pressures that could persist long-term, leading to potential capital inflows into gold as an inflation hedge. The tapering announcement by the U.S. Federal Reserve (Fed) may ease the strong U.S. dollar trend, which also supports gold prices.

However, the researcher forecasted that as the possibility of Fed interest rate hikes increases in the second half of next year while inflation may ease, real interest rates (nominal interest rates minus inflation) could decline, making gold?a non-interest-bearing asset?likely to see price decreases.

This content was produced with the assistance of AI translation services.