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CRU Group: Where Macroeconomics Meet Commodities

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CRU Group: 50 years of Commodity Research

The following content is sponsored by CRU Group.

CRU Group

CRU Group: Where Macroeconomics Meet Commodities

Commodities are crucial to our everyday lives. From the homes we live in, to the energy we use and the food we eat—none of these would be possible without commodities.

Today’s infographic from CRU Group celebrates 50 years of commodities research and charts the prices of the materials that make our world work.

The Importance of Commodities

CRU Group has 50 years of experience in providing business intelligence on the global metals, mining, and fertilizer industries. Regularly analyzing over 50 commodities, here are CRU’s highlights on four key commodities: aluminium, copper, steel, and nitrogen.

Similarly to stocks, commodities are available for sale on the open market, and prices are susceptible to changing economic conditions.

Factors Affecting Commodity Markets

CRU Group has identified five key factors that are currently affecting commodity markets.

  1. China Stimulus: China’s economy has recently slowed and policy makers are using stimulus to support sustainable economic growth. However, the delivery of stimulus is different from the past, moving away from infrastructure investment and towards tax cuts for businesses and households.
  2. Recession: Some analysts have been warning of a recession since 2018. When the economy is in decline, commodity sectors feel the downturn more acutely, because industrial production tends to slow down and there is less demand for materials.
  3. Automotive Tariffs: During 2019, there was a sharp contraction in automotive sales and production, due to the threat of U.S. auto tariffs. However, the main driver is stricter auto emissions standards introduced in Europe and Asia, creating uncertainty for consumers.
  4. Environment: Governments continue to adopt regulations in response to rising environmental concerns. Green policies will encourage investment in renewable energy infrastructure and electric vehicles, changing the type of minerals required for these technologies.
  5. Rise of Asia: By 2035, 3.5 billion people will be living in Asian cities, an increase of 47% from today. These growing cities will necessitate large-scale infrastructure projects, which consume vast amounts of resources.
  6. These five factors will drive the economic patterns of key commodities into the future.

    Commodities Spotlight

    CRU Group has been providing business intelligence on the global metals, mining and fertilizers industries for over 50 years. Regularly analyzing over 50 commodities, CRU highlights four key commodities here:

    Aluminium

    Aluminium is one of the most in-demand metals in the world by volume, second only to steel. Its lightweight, reflective, ductile and anti-corrosion properties make it the metal of choice for a range of applications. It takes four to five tonnes of bauxite ore to produce one tonne of aluminium.

    Copper

    Copper plays a huge role in the transition to clean energy. It is a good conductor of heat and electricity, and is also ductile and recyclable. These properties make it a crucial material in electric vehicles and renewable energy infrastructure, as well as electronic goods and construction.

    In the past 5,000 years, 550 million tonnes of copper has been produced. To keep up with demand, the world will need the same amount in the next 24 years.

    Steel

    Steel is lightweight, flexible, tensile, and recyclable. Its versatility and cost-saving benefits make it a preferred material within the construction sector. Demand for steel across various sectors signals growth and is a good indicator of the health of the general economy.

    China is responsible for 51% of the world’s steel production, and accounts for 49% of its demand.

    Nitrogen

    Nitrogen is an odorless, colorless gas that makes up 78% of the earth’s atmosphere by volume. Industrial processes capture ammonia from the air and convert it to other nitrogen compounds. Urea is the most common, and is primarily used as fertilizer. The global nitrogen market is worth $62.8 billion.

    Where Next?

    How CRU Navigates Complex Commodity Markets

    Commodity prices have many different drivers, from supply and demand dynamics to exchange rate movements. Volatility is a common feature to all these commodities and up-to-date pricing and information is critical.

    CRU commodity specialists disentangle these forces to interpret and forecast price movements. They apply a range of modelling techniques, as well as their experience and expert judgement.

    For 50 years, CRU Group has tracked the commodities that drive the modern world, bringing macroeconomic insights to investors for accurate pricing—and will continue to do so for the next 50 years.

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More Than Precious: Silver’s Role in the New Energy Era (Part 3 of 3)

Long known as a precious metal, silver in solar and EV technologies will redefine its role and importance to a greener economy.

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Silver More Than Precious

Silver’s Role in the New Energy Era (Part 3 of 3)

Silver is one of the first metals that humans discovered and used. Its extensive use throughout history has linked its name to its monetary value. However, as we have advanced technologically, so have our uses for silver. In the future, silver will see a surge in demand from solar and electric vehicle (EV) technologies.

Part 1 and Part 2 of the Silver Series showcased its monetary legacy as a safe haven asset as a precious metal and why now is its time to shine.

Part 3 of the Silver Series comes to us from Endeavour Silver, and it outlines silver’s role in the new energy era and how it is more than just a precious metal.

A Sterling Reputation: Silver’s History in Technologies

Silver along with gold, copper, lead and iron, was one of the first metals known to humankind. Archaeologists have uncovered silver coins and objects dating from before 4,000 BC in Greece and Turkey. Since then, governments and jewelers embraced its properties to mint currency and craft jewelry.

This historical association between silver and money is recorded across multiple languages. The word silver itself comes from the Anglo-Saxon language, seolfor, which itself comes from ancient Germanic silabar.

Silver’s chemical symbol, “Ag”, is an abbreviation of the Latin word for silver, argentum. The Latin word originates from argunas, a Sanskrit word which means shining. The French use argent as the word for money and silver. Romans bankers and silver traders carried the name argentarius.

While silver’s monetary meanings still stand today, there have been hints of its use beyond money throughout history. For centuries, many cultures used silver containers and wares to store wine, water, and food to prevent spoilage.

During bouts of bubonic plague in Europe, children of wealthy families sucked on silver spoons to preserve their health, which gave birth to the phrase “born with a silver spoon in your mouth.”

Medieval doctors invented silver nitrate used to treat ulcers and burns, a practice that continues to this day. In the 1900s, silver found further application in healthcare. Doctors used to administer eye drops containing silver to newborns in the United States. During World War I, combat medics, doctors, and nurses would apply silver sutures to cover deep wounds.

Silver’s shimmer also made an important material in photography up until the 1970s. Silver’s reflectivity of light made it popular in mirror and building windows.

Now, a new era is rediscovering silver’s properties for the next generation of technology, making the metal more than precious.

Silver in the New Energy Era: Solar and EVs

Silver’s shimmering qualities foreshadowed its use in renewable technologies. Among all metals, silver has the highest electrical conductivity, making it an ideal metal for use in solar cells and the electronic components of electric vehicles.

Silver in Solar Photovoltaics

Conductive layers of silver paste within the cells of a solar photovoltaic (PV) cell help to conduct the electricity within the cell. When light strikes a PV, the conductors absorb the energy and electrons are set free.

Silver’s conductivity carries and stores the free electrons efficiently, maximizing the energy output of a solar cell. According to one study from the University of Kent, a typical solar panel can contain as much as 20 grams of silver.

As the world adopts solar photovoltaics, silver could see dramatic demand coming from this form of renewable energy.

Silver in Electric Vehicles

Silver’s conductivity and corrosion resistance makes its use in electronics critical, and electric vehicles are no exception. Virtually every electrical connection in a vehicle uses silver.

Silver is a critical material in the automotive sector, which uses over 55 million ounces of the metal annually. Auto manufacturers apply silver to the electrical contacts in powered seats and windows and other automotive electronics to improve conductivity.

A Silver Intensive Future

A green future will require metals and will redefine the role for many of them. Silver is no exception. Long known as a precious metal, silver also has industrial applications metal for an eco-friendly future.

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Visualizing All the Known Copper in the World

Are we running out of copper? This graphic from Trilogy Metals paints a clear picture of all the copper in the world, above and underground.

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All the Copper in the World

Visualizing All the Known Copper in the World

Copper has many important applications in the modern economy. From smartphones and cars, to homes and hospitals, we use the metal almost everywhere, especially with renewable energy.

Often, consumers take for granted the accessibility to modern technology without the thought of where the materials come from or their impact on the environment. The world and its resources are finite and confined by both geography and the technology used to extract resources.

As governments and economies struggle to achieve a sustainable balance between humanity’s material impact and the health of the planet, knowing the availability of resources will become a critical pivot for achieving and maintaining that balance.

Copper is one such resource—and today’s graphic from Trilogy Metals outlines all the copper ever mined and what known resources still exist on Earth.

Are we running out of copper?

Above Ground Copper Resources

The production of mined copper has increased dramatically over the last two decades, From 9.8 million metric tons in 1995 to 20 million metric tons in 2019, a 104% rise over 25 years.

A total of 700 million metric tons of copper have been mined throughout history. Based on the 2019 average price of $6,042/metric ton, that’s worth $4.2 trillion—more than the value of Apple and Amazon combined.

Chile has been the source of the majority of the world’s copper and the biggest copper mining nation. Together, Chile, Peru, and China account for 48% of current global copper production.

RankingCountryMine Production 2019 (Ktons)CountryReserves 2019 (Ktons)
#1Chile5,600Chile200,000
#2Peru2,400Peru87,000
#3China1,600Australia87,000
#4United States1,300Russia61,000
#5Congo1,300Mexico53,000
#6Australia960United States51,000
#7Zambia790Indonesia28,000
#8Mexico770China26,000
#9Russia750Kazakhastan20,000
#10Kazakhastan700Congo19,000
#11Indonesia340Zambia19,000
Other Countries3,800Other Countries220,000
World Total20,000World Total870,000

Source: USGS

As we enter the era of renewable energy, electric vehicles, and see more global economic growth, the demand for copper will continue to rise. In fact, the Copper Alliance projects an increase of 50% in just the next 20 years.

Are We Running Out of Copper? Not So Soon

Although a large chunk of the Earth’s copper is already above ground, there’s still more to mine.

According to the USGS, identified copper resources amount to 2.1 billion metric tons, with a further 3.5 billion metric tons in undiscovered resources.

At current production rates, it would take about 105 years for us to use all of it and this does not even account for recycling or new discoveries. Copper is 100% recyclable, and nearly all of the 700 million metric tons of mined copper is still in circulation. With this in mind, it’s safe to say that we won’t be running out of copper anytime soon.

Despite copper’s apparent abundance, the red metal is expensive to actually get out of the ground. As a result, the supply of copper has often fallen short in meeting its rising demand. This, in addition to falling resource grades in Chile, the largest producer of copper, emphasizes the need for new discoveries and mines.

While there are known reserves of copper above the ground, the Earth remains largely unexplored because of the inability to explore for minerals in the depths of the oceans and other planets. As the readily available supply of copper becomes scarce, the incentive to mine currently uneconomic copper increases.

A Mineral Intense Future

Most consumers take the immediate availability of materials such as copper and other metals for granted, with little thought about whether there is enough.

But it’s important to remember that these materials are as finite as the dimensions of the Earth. In this material world, understanding what is and what is not available is critical for a sustainable future here on Earth.

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