Battery metals like lithium, cobalt, nickel and copper are set to be top price performers on a five-year horizon despite short-term pricing pressure, says Macquarie Bank.

This chart from Macquarie Bank shows where individual commodities sit in their price cycle – at least based on Macquarie’s opinion – providing investors a guide as to what commodities are likely to be hot, and not, over the next two years.

The arrows indicate where Macquarie sees prices moving over the next two years based on supply and demand dynamics.

In 2018, Macquarie likes the look of precious metals given the likelihood of US dollar weakness, higher inflation and ongoing anxiety surrounding global trade.

It also likes the look of uranium, suggesting that upside risks are building as low prices have crippled new projects leading to a draw in existing mine supply.

Source: Macquarie Bank

In the short-term, Macquarie’s least preferred commodities in 2018 include lithium and cobalt along with steel, manganese ore, iron ore and metallurgical coal — the latter three all linked to slower global demand growth for steel.

But for those interested in medium-to-longer-term trends, the list below shows the individual commodities Macquarie expects to be the standouts and sliders over a two and five-year period.

Battery metals are the stand outs — especially over a five-year horizon.

Nickel stands to benefit over a two-year period as electric car battery-makers “crowd out” stainless steel makers, Macquarie says.

Stainless steel now accounts for 70 per cent of global nickel demand, but it is also used in the cathode of lithium-ion batteries needed for electric cars.

Morgan Stanley has estimated that nickel’s use in electric vehicles could reach 86,000 tonnes by 2020 — rising to as much as 340,000 tonnes by 2025.

Two other key battery ingredients — lithium and cobalt — are headed for price rises over five years. So is copper which is used in batteries, electric motors and charging stations.

Morgan Stanley expects electric vehicles to make up 7 per cent of the global passenger car fleet by 2030 — rising to 24 per cent by 2040 and 57 per cent by by 2050.

By 2050 there would be more than a billion electric cars on the roads.

Here is Macquarie Bank’s predictions for commodity prices over two to five years:

Source: Macquarie Bank

 

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