馃攱 LITHIUM: THE NEW PARADIGM? 馃攱
The world fights against two models: fossil fuels and clean energy. At first glance, oil seems more polluting than lithium in terms of greenhouse gases, and the cost of extracting oil could be more expensive than lithium, in some cases. But lithium also has negative impacts on biodiversity (reserves) due to excess consumption of water and energy for extraction and refining, and the production of waste such as sulfuric acid and sodium chloride.
In any case, lithium is going to be a key peace in economic development. It is used in batteries, pharmaceuticals (psychiatric uses), aerospace industry, ceramic and glass industry, lubricants and greases. This means that any variation in its price due to market fluctuations will affect the rest of the mentioned industries. Currently there are reserves in South America (mainly), Australia, China and the USA, but the deglobalization process could push prices up to meet future demand and possible protectionist barriers.
The chart shows, based on weekly data of 1 year, that Lithium has the best correlation with Rare Earths (± 87%), Hydrogen (± 66%) and SP500 (± 60%). The less (inverse) correlation was with Heating Oil (± -12%) and a neutral with Coal (± 11%), Oil (± 8%) and other metals. A priori, we could assume that a higher demand of lithium might not impact much on the oil prices and viceversa. The final question is: Will #lithium be strong enough or is it a temporary trend versus other nuclear sources or sodium, aluminium, magnesium or zinc?
The best analysis is yours!
In any case, lithium is going to be a key peace in economic development. It is used in batteries, pharmaceuticals (psychiatric uses), aerospace industry, ceramic and glass industry, lubricants and greases. This means that any variation in its price due to market fluctuations will affect the rest of the mentioned industries. Currently there are reserves in South America (mainly), Australia, China and the USA, but the deglobalization process could push prices up to meet future demand and possible protectionist barriers.
The chart shows, based on weekly data of 1 year, that Lithium has the best correlation with Rare Earths (± 87%), Hydrogen (± 66%) and SP500 (± 60%). The less (inverse) correlation was with Heating Oil (± -12%) and a neutral with Coal (± 11%), Oil (± 8%) and other metals. A priori, we could assume that a higher demand of lithium might not impact much on the oil prices and viceversa. The final question is: Will #lithium be strong enough or is it a temporary trend versus other nuclear sources or sodium, aluminium, magnesium or zinc?
The best analysis is yours!
Copyright: Joel Padilla 2023
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