Time in the Market
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THE COMMODITIES SIX PACK

While some more prominent commodity traders have been building their metals trading desks for years, others in the space, particularly those focusing on Oil & Gas, have been hitting the gym to strengthen their presence in the metals industry.

With the help of their ‘personal trainers’ (headhunters), these traders have been working to build up muscle and compete with the bodybuilders of the metals industry; by hiring teams of experienced metal traders. These companies want to build a “six-pack portfolio” of critical metals such as copper, cobalt, aluminum, nickel, silver, and lithium. With this portfolio, they aim to stay ahead of the curve and compete effectively in the race for the energy transition.

The transition towards a more sustainable and decarbonized energy system drives demand for critical metals, including copper, cobalt, aluminum, nickel, silver, and lithium. These metals are essential to producing renewable energy technologies, energy storage systems, and electric vehicles, among other applications.

Copper is a vital metal in the energy transition because of its excellent electrical conductivity, making it an essential material for electrical wiring, motors, transformers, and other components of power transmission and distribution systems. As the world transitions towards a more sustainable energy system, there will be a significant increase in the demand for copper due to the growth of renewable energy technologies such as solar, wind, and electric vehicles, which require more copper-intensive infrastructure than traditional energy sources.

Cobalt is an essential metal in the energy transition because it is a critical component in producing lithium-ion batteries, which are widely used in electric vehicles and energy storage systems. Lithium-ion batteries are essential to the growth of renewable energy sources, such as solar and wind power, because they enable energy to be stored and used when the sun is not shining, or the wind is not blowing. Cobalt is used in the cathodes of lithium-ion batteries, which are responsible for storing and releasing energy.

Aluminium is a lightweight, corrosion-resistant metal that is essential to the production of electric vehicles and other energy-efficient technologies. The use of aluminum in electric vehicles reduces weight and improves energy efficiency, thereby increasing driving range and reducing emissions.

Nickel is a strong, corrosion-resistant metal that is used in the production of stainless steel, which is widely used in the construction, infrastructure, and transportation sectors. Nickel is also used in the production of batteries for electric vehicles and energy storage systems.

Silver is an excellent conductor of electricity and is used in producing photovoltaic cells for solar panels. As the world transitions towards a more sustainable energy system, the demand for solar panels is increasing rapidly, driving demand for silver.

Lithium is a critical component of lithium-ion batteries and is essential to producing electric vehicles and energy storage systems. As the demand for electric vehicles and energy storage systems increases, so does the need for lithium.

As part of the Oil & Gas Traders’ reinvestment of well-deserved profits from the previous year, copper – also known as Dr. Copper and currently regarded as the king of metals – is becoming increasingly important in the energy transition. It is now being considered the new oil, making it a sensible addition to the portfolios of respected oil traders. This is particularly relevant during the current global economic uncertainty caused by the “recessiondemic.”

However, incorporating metals into their portfolios requires internal restructuring and enhancements to processes and systems, especially for new assets that have not been traditionally traded. Despite these challenges, setting up metals desks can be a wise investment for oil traders looking to diversify their portfolios and position themselves for success in the evolving energy landscape.

Our Industry is beefing up and wants that Metals 6 Pack.

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