Mining
The Periodic Table of Commodity Returns
Periodic Table of Commodity Returns (2019 Edition)
Commodities are an interesting asset class to watch.
In certain years, all commodities will move in price together in an obvious and correlated fashion. This is a representation of the cyclical characteristics of commodity markets, in which macroeconomic factors align to create a tide that lifts or sinks all boats.
At the same time, however, each individual commodity is incredibly unique with its own specific set of supply and demand circumstances. In the years when these supply or demand crunches materialize, a certain commodity can surge or crash in price, separating itself from the rest of the pack.
A Decade of Commodity Returns
Today’s visualization comes to us from our friends at U.S. Global Investors, and it tracks commodity returns over the last decade.
More specifically, it takes a closer look at individual commodities (i.e. corn, gold, oil, zinc) to show how performance can vary over time. With a quick examination of the graphic, you can see years where commodities moved together – and some years where individual commodities stole the show unexpectedly.
Palladium: A Perennial Winner
The best performing commodity in 2018 was palladium, which found itself up 18.6% – just enough to edge out corn, which jumped up 17.9% in price last year.
Interestingly, palladium has also been the best performing commodity over the 10-year period as well:
Palladium has finished in first place in four of the last 10 years, including in 2017 and 2018 – it’s also impressive to note that palladium has only had negative returns twice in the last decade (2011, 2015).
A Crude Awakening
The worst performing commodity in 2018 was crude oil, which fell -24.8% in price.
Like palladium, this wasn’t a unique occurrence: crude has actually been the worst performing commodity investment over the last decade:
As you can see, crude oil has been the worst (or second worst) commodity in three of the last five years.
Further, as our chart on how all assets performed in 2018 shows, crude oil was outperformed by every other asset class, and the energy sector had the poorest performance out of all S&P 500 sectors last year.
Base Metals
Why Copper and Nickel Are the Key Metals for Energy Utopia
With more renewables and EVs plugging into the grid, copper and nickel are essential building blocks for the energy transition.
Copper and Nickel: The Key Metals for Energy Utopia
The raw materials required to transport and store clean energy are critical for the energy transition. Copper and nickel are two such metals.
Copper is essential for the transmission and distribution of clean electricity, while nickel powers lithium-ion batteries for EVs and energy storage systems.
The above infographic sponsored by CanAlaska Uranium explores how copper and nickel are enabling green technologies and highlights why they are essential for a utopian energy future.
Copper: Transporting Clean Energy
When it comes to conducting electricity, copper is second only to silver. This property makes it an indispensable building block for multiple energy technologies, including:
- Electric vehicles: On average, a typical electric car contains 53kg of copper, primarily found in the wirings and car components.
- Solar power: Solar panels use 2.8 tonnes of copper per megawatt (MW) of installed capacity, mainly for heat exchangers, wiring, and cabling.
- Wind energy: Onshore wind turbines contain 2.9 tonnes of copper per MW of capacity. Offshore wind turbines, which typically use copper in undersea cables, use 8 tonnes per MW.
- Power grids: Copper, alongside aluminum, is the preferred choice for electric transmission and distribution networks due to its reliability and efficiency.
BloombergNEF projects that, due to its expansive role in clean energy, the demand for copper from clean energy applications will double by 2030 from 2020 levels. The table below compares annual copper demand from clean energy, in tonnes, in 2020 vs. 2030:
| Year | Power Grids | EV batteries | Wind | Solar | EV charging | Total (tonnes) |
|---|---|---|---|---|---|---|
| 2020 | 1,700,000 | 210,000 | 165,000 | 83,000 | 4,200 | 2,162,200 |
| 2030P | 2,000,000 | 1,800,000 | 352,000 | 104,000 | 47,100 | 4,303,100 |
Although power grids will account for the largest portion of annual copper demand through 2030, EV batteries are projected to spearhead the growth.
Nickel: Powering Lithium-ion Batteries
Nickel is a key ingredient in lithium-ion batteries for EVs and stationary energy storage systems. For EVs, nickel-based cathodes offer more energy density and longer driving ranges as compared to cathodes with lower nickel content.
According to Wood Mackenzie, batteries could account for 41% of global nickel demand by 2030, up from just 7% in 2021.
| End-use | 2021 % of Nickel Demand | 2040P % of Nickel Demand |
|---|---|---|
| Stainless steel | 69% | 45% |
| Battery precursors | 7% | 41% |
| Other | 24% | 14% |
Nickel-based cathodes for lithium-ion batteries, including NMC (Nickel Manganese Cobalt) and NCA (Nickel Cobalt Aluminum), are prevalent in EVs and make up more than 50% of the battery cathode chemistry market.
A Bright Future for Copper and Nickel
Both copper and nickel are essential building blocks of EVs and other key technologies for the energy transition and ultimately energy utopia.
As more such technologies are deployed, these metals are likely to be in high demand, with clean energy applications supplementing their existing industrial uses.
CanAlaska is a leading exploration company with a strategic portfolio of uranium, nickel, and copper projects in North America. Click here to learn more.
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