Raw materials does not sound good, better commodity, even if he is not Italian, because, unfortunately, Italy has lost its primacy in world trade since the 700th century. The English term better condenses the meaning of these goods that have always been essential for the economy of humanity. Today, like 4000 years ago, wheat is still one of the most important commodities, the basis of food, then the heritage around which temples, cities and civilizations were built. In the years of agricultural industrialization, cocoa, coffee, cotton, corn were added; then metals, ferrous and non-ferrous, such as copper, aluminium, lead, became very relevant.
No good has experienced growth like that ofthe energy, in particular oil, today the most important commodity traded in the world, with a value of around 2 trillion dollars a year. A record achieved thanks to a commoditization process that began timidly in the early 80s of the last century and then became disruptive at the turn of 2000.
While, rightly, all the attention is on the developments of light technologies, from chips to artificial intelligence, through digitalisation and the internet of things, the world always needs food, metals and energy. Indeed, thanks to the signals of market price highly financialized, the industry is able to satisfy demand for a world population that has grown from 2 billion people at the beginning of the 900s to 8 billion today, which will become 10 billion in 2040.
It is almost paradoxical that i commodity markets on the one hand they are like this speculative, but on the other, they guarantee revenues for an industry, the one that supplies commodities, which is capital-intensive with investments in the billions. It is also for this reason that prices are subject to strong instability, uncertainty, cyclicality, variability, and thus become the right place for investors, or speculators, those who are convinced that they understand the trend of the fundamentals in advance.
Gas crisis, lithium boom and copper renaissance: trends in energy and metals markets
Lately energy, after the successes of oil, has returned to the center, both for the gas after the 2022 crisis in Europe, both for the potential demand for metals linked to the transition. The price of gas on the Intercontinental Exchange went from 10 euros/MWh in 2020 to 330 in August 2022 and today is around 28. Roller coaster caused by the Russian-Ukrainian war, with 40% of supplies of gas falling gas to Europe.
At the same time, the price of Lithium, a metal used to make batteries (including smart phones), went from 10 thousand dollars in 2020 to 80 thousand in 2022 and today it has dropped back towards 10 thousand. Here the instability is caused by expectations on the sales trend of electric cars. Partly because sales of electric cars have fallen, partly because instead of lithium, which can catch fire when it overheats, other solutions are arriving, such as sodium, expectations on its price have reversed from bullish to bearish .
More recently the copper it started to rise again, mostly due to the recovery in Chinese demand. But copper deserves great attention, because it is the metal of the ecological transition that is based on a greater diffusion of electricity throughout the world, in all countries, in all sectors. And electricity is mostly generated and transported thanks to a wire, made of copper, like the one used for alternators, found in large power plants, or in wind turbines, transforming the mechanical motion into flows of electrons.
Steel and aluminum on the rise, but oil remains the dominant commodity
Even the same steel o aluminum are expected to grow strongly, again for reasons linked to ecological conversion, because wind turbines and photovoltaic panels rest on metal structures. The attention, enthusiasm, sometimes disappointments, for the ecological transition lead to strong price swings, what speculators are looking for.
For calmer investors, with greater risk aversion, or for those looking at long-term returns, the Petroleum it is always the most interesting commodity. It was the leader of the financialization process of the energy markets and its listing stands out on the financial pages of the real economy, with its indices alongside those of gold, interest rates, stock market indices and exchange rates. A deserved success, because, with a bit of rhetoric, it is the blood of the global economy, because 97% of global transport is done with its derivatives. It is always the first source to cover global energy demand, with 32% of the total, approximately 4,5 billion tons, or 102 million barrels per day. To give an order of magnitude, Italy consumes around 50 million tonnes of crude oil every year, 1 million barrels per day.
Oil demand is the first that is expected to fall under the blows of the transition, precisely due to the transition to new propellants, starting with the electricity accumulated in lithium or sodium batteries. Instead, oil consumption continues to rise and will reach a new historic peak of 2024 million barrels per day in 103. The investments in new capacity are not necessary for the moment, because new production arrives from South America and the USA. It is the mismatch between growth in demand and growth in supply that matters, for oil as for all commodities: those who are good at anticipating it can then invest in these assets.
