The CME Group warned that the ongoing ramp up of green energy and the expansion of the EV market will put pressure on supplies of industrial metals, like copper ( HG1:COM ) and aluminum. Over time, this could lead to a shortage of these key components of the energy transition.
In a research note , the CME Group said, “Electric vehicle sales projections pose challenges for copper supply, with a 10 million metric ton deficit possible by 2035.”
Both copper and aluminum represent two of the key metals in the EV world. Copper is relied upon for its capacity to conduct electricity and aluminum is valued for its strength-to-weight ratio.
In making its case, the CME quoted industry executive Andy Massey, who outlined how aggressively a switch to EVs would impact the market for aluminum.
"Previously our industry was excited to get 300 pounds of aluminum per car and now some of the EV cars get as much as 500-800 pounds of aluminum," the vice president of procurement for Bonnell Aluminum said. "So it’s a huge leap for us."
Additionally, the CME noted that copper has seen increased usage in EV cars as well, although at a smaller scale.
Looking at potential investment angles for this market dynamic, there are a handful of ETFs and ETNs that are closely tied to the aluminum and copper markets. Specifically, these include: the iPath Series B Bloomberg Aluminum Subindex Total Return ETN ( NYSEARCA: JJU ), Global X Copper Miners ETF ( NYSEARCA: COPX ), United States Copper Index Fund ( NYSEARCA: CPER ), and the iPath Series B Bloomberg Copper Subindex Total Return ETN ( NYSEARCA: JJC ).
In other news on the EV front, ProShares launched a new ETF that is meant to capitalize off the growing demand for electric vehicles and batteries.
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Growth of green energy and EVs could lead to shortages of industrial metals