Batteries and electric vehicles are an increasingly discussed topic in the market, even more so after announcements such as Tesla's new factory in Mexico (their sixth factory in the world) which is expected to start operating in 2024, potentially reaching the mark of 1 million units produced per year at the factory, in addition to the signing in the same country of the decree to nationalize lithium exploration, with Mexico having the 9th largest known reserves of this mineral.
fundamental for the production of batteries and which is seen by many as the “new oil” in the coming years.
But what is the market like and how can it impact the buyer? What points do buyers need to observe and take precautions in the market? If the buyer deals with metals, the impact has already started to appear in the sector.
Several companies and countries have recently announced major investments in clean energy production, such as the Inflation Reduction Act in the US, which, combined with the end of China's strict lockdown policies and the country's incentives for local construction, have increased the demand prospects for metals such as copper, which are currently suffering from supply problems in countries such as Chile and Peru and which are projected to be supply below demand in the coming years. In addition, we also have the possibility of more moves by countries such as Mexico to nationalize mining operations or even Indonesia, which banned nickel ore exports to bring battery manufacturers to local production, a move that other countries such as the Philippines are considering replicating.
Therefore, as a summary of the scenario, in the coming years the metals market will be directly impacted by demand from the battery and clean energy sector, in addition to the impacts on changes in production processes in steelmaking and metallurgy to make everything cleaner and possibly more expensive, at least in the short term.
However, the buyer must also monitor the logistics sector, whether land, air or sea. In the land sector, the main discussions are related to electric batteries, although there are other conversations such as biodiesel and ethanol, which Brazil has a privileged position in. However, in the maritime and air sectors, the discussions are different because current batteries do not have the capacity to serve these sectors on the desired scale. In the maritime sector, there is still no clear trend as to which will be the champion to replace current fuels, which have already seen reductions in sulfur content in recent years, with companies betting on methanol.
LNG and even ammonia, but all of these items have problems in terms of current production quantity, production costs, etc.
Another factor is that, despite growing pressure from companies to reduce the carbon footprint of maritime transport to reduce total pollution from the production process of transported products, international bodies in the sector have not yet reached an agreement on incentives and penalties for the green transition.
In the aviation sector, there is a lot of talk about SAF, a fuel seen as an ally in reducing pollution, but its production is still very limited to the US and with high prices due to low supply, which delays this change in a sector like the Brazilian aviation sector in which 40% of the current cost is derived from kerosene.
Buyers need to be aware of these points, as changes to more expensive fuels are passed on to transportation costs, in addition to the high investments needed to modernize and even replace vehicle fleets. The future may be green, but buyers need to monitor costs so that their purchase portfolio, whether for transportation or metals, is also green and not red.