The prices of these commodities will rise the most in 2021, and the number one has something to do with everyone

There is a commodity that does not appear in the retail sector, but is related to the national economy and people's livelihood. It includes energy commodities, basic raw materials, and agricultural and sideline products. It is called a "bulk commodity."

Over the past year, commodities have shone brightly. The prices of fossil fuels, agricultural products and industrial metals have risen throughout the year, and in some cases have more than doubled.

▲ Ranking of commodities. Picture from: Quartz

Foreign media Quartz believes that this is due to the gradual recovery of the economy from the epidemic and the supply-side restrictions of various products.

The overall performance of the fossil fuel industry is the best, mainly because of OPEC's oil production cuts and the global transportation freeze, which has caused energy commodity prices to hover at low levels for most of 2020.

Driven by shipping restrictions and Brazil’s drought and cold weather, coffee also performed well. CNBC reported that coffee prices have reached a 10-year high, and analysts expect tight market supply to continue until 2023.

▲ Picture from: Getty Images

However, no commodity can rival lithium.

Lithium is a soft metal that is vital to batteries, and one of the most important elements in our transition to a low-carbon future. It is even more important when the electric vehicle market takes off.

The core of electric vehicles is high-performance rechargeable batteries. Although there are many types, lithium-ion batteries are still the first choice. According to S&P Global , a commodity market service provider, global demand for lithium will exceed supply for the first time in 2021, and the gap is expected to widen.

Data from Trading Economics shows that at the end of December, the price of lithium carbonate in China was 277,500 yuan/ton, which will soar by 486% in 2021.

▲ The price fluctuation of lithium. Picture from: Trading Economics

This is where lithium differs from petroleum. The demand for oil has not increased exponentially. The soaring oil price is only due to the return of demand to normal, while the recovery of normal supply is lagging behind. In addition, the lithium industry, which has exploded in demand, has also been affected by the epidemic, and a combination of various factors has led to a surge in lithium prices.

Most of the world's lithium comes from mines in Australia and South America, and China is dominant in battery manufacturing. S&P Global predicts that the global supply of lithium in 2022 will be 55% higher than in 2020.

▲ Battery. Picture from: Getty Images

At the same time, data from the International Energy Agency show that by 2040, the demand for lithium will increase by 40 times, and the economy at that time will be more dependent on batteries than it is now, including the development of electric vehicles and utility-scale energy storage.

Now, investors in China and elsewhere are investing billions of dollars in new lithium mines.

The good news is that there is a large amount of lithium available for mining, but the problem lies in the environmental problems caused by mining.

The current lithium production is extremely water-consuming , and traditional mining methods often destroy the land and eradicate plants, making arid areas with lithium deposits "exacerbating the situation."

▲ Picture from: greenbiz

This means that the development of lithium requires a delicate balance. We use lithium to deal with climate change instead of causing more environmental or community problems.

Although less influential mining methods have emerged, due to the high price of lithium, battery developers will likely invest in technologies that completely bypass lithium.

A California lithium-ion battery supplier said in an interview with Forbes that the recent surge in lithium prices did have an impact on their business:

"Costs are growing faster than prices, and the quality of components is also deteriorating. Therefore, we must bear more service-related costs. Some components become unavailable, and we must increase engineering investment instead of outsourcing."

▲ Reference materials:
1.https://qz.com/2109227/lithium-was-the-hottest-commodity-of-2021/
2.https://www.forbes.com/sites/rrapier/2021/12/31/the-challenges-posed-by-rising-lithium-prices/?sh=6760974e3af9

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