Top 5 commodities to watch for investment

Highlights

• Commodities are one of the leading asset investments.
• Post vaccine rollouts, commodity demands have bounced back while the supply of most commodities lacks pace.
• Few materials like Copper, Cobalt and Lithium are to sustain demand even in future. 

Prices of commodities have reached new heights in 2021. Higher demand with supply glut drove prices of leading commodities. Higher prices are encouraging more investment into commodities. Investors are putting money in the commodity market for futures trading and long-term investment purposes. 

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Images Source: trading volume-© Ashdesign | Megapixl.com, Demand & Supply-© Artinspiring | Megapixl.com,

Returns-© Siraanamwong | Megapixl.com, price movement-© Creepycube | Megapixl.com

Given these facts, let’s look at the top commodities to watch for Investment:

Copper (Cu)

Copper is an essential battery metal for EVs and other charging equipment. Even solar and wind power installations contain copper. It holds a lot of significance in the green future the world is presently walking into.

Since January 2021, copper prices have surged more than 20%. A lot of analysts believe that the copper supply deficit will continue till 2023. Commodity consultants also predict that numerous mines around the world will run out of copper. As a result, copper prices are forecast to rise even in the future. It is thus attracting long term investors in the commodity space.

Lithium (Li)

Lithium demand has regained prices from the second half of 2020. Price rebound is due to restocking from producers. Demand for Lithium as raw material is arising due to spike in the demand for Electric vehicles (EV), Energy storage systems (ESS), 5G devices, and Internet of Things (IoT) infrastructure. 

The demand for Lithium continues to grow from 2020 to 2021, driven by rising EV sales in Europe, China and North America. Supply shortages are also pushing prices higher. Lithium has given over 90% YTD return.

Related Article:  5 Hot Lithium (Li) stocks on ASX

Image Source: © Kentoh | Megapixl.com

Aluminium (Al)

Aluminium is a multi-utility metal. It is present in food packages, cell phones, cars and even at construction sites. While demand for Aluminum comes from various sources, supply is limited. China is the largest producer of Aluminum, and it is cutting down on production to reduce emissions. As a result, the supply deficit is to become more prominent in 2-3 years.

Producers are trying their best to meet the demand, but resurging COVID-19 disruptions are negatively affecting them. In addition, supply chains from other parts of the world are not as developed as in China. These factors are creating a bullish trend for Aluminum prices in future. Since January 2021, prices have surged by over 30%. Though supply has always matched up demand, aluminium markets are now heading towards a new trend.

Cobalt (Co)

Battery metal demand has seen an uptick in 2021. Batteries account for more than half of total cobalt demand. Industrial uses of cobalt are mainly for superalloys, cemented carbides and ceramics. With high production forecasts of EVs, Cobalt demand has surged.

However, mine outputs have not matched up mainly because of pandemic induced restrictions. The sluggish pace of operations has resulted in a price rise. Cobalt has given over 60% returns from the start of 2021. The demand is to grow in future with the current EV trend.

Palladium (Pd)

Palladium helps store hydrogen. It is used in automobile catalytic converters to control greenhouse gas emissions. Solid commercial vehicle sales are currently pushing the demand for Palladium. Though it was not in the limelight till now, Palladium demand has grown recently. Russia is the largest producer, followed by South Africa.

Long strikes at production sites in the past and COVID led disruptions have reduced its supply. The resultant is a price rise in the commodity. Palladium price has risen over 7% YTD. Given it is the most precious metal on earth, the price rise is significant. As the world seeks a hydrogen-powered future, Palladium demand is expected to stay.  

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