[ad_1]
As automakers transition to electric vehicles, Goldman Sachs has stepped up trading in battery metal cobalt, locking in one of the hottest corners of the bulk commodity market.
According to people familiar with the matter, the bank has been active in the cobalt market since last year and has recently made physical purchases for the first time.
The participation of banks such as Goldman Sachs may help bring liquidity to cobalt trading, an opaque market where prices are privately determined by buyers and sellers.
Automakers need metals such as lithium and cobalt as batteries, and some Direct source From miners. But they are open to potential painful price fluctuations.
According to data from Benchmark Mineral Intelligence, the price of lithium carbonate has risen by 65% this year, while the price of cobalt sulfate has risen by 24%.
Prices may continue to rise rapidly. In order to achieve the goals of the Paris climate agreement, the demand for cobalt will increase by more than 20 times by 2040. according to To the International Energy Agency.
At present, due to too little trading volume on exchanges such as the London Metal Exchange, automakers cannot easily hedge their exposure to battery metals such as cobalt. Part of the reason is concerns about the source of some physical cobalt in the LME warehouse, which may be related to child labor in the Democratic Republic of Congo.
The Chicago Mercantile Exchange Group’s Comex exchange in New York is also working to increase liquidity for its cobalt contract launched in December. “All contracts need time to establish,” it said.
People familiar with the matter said that at the same time, Goldman Sachs is providing hedging products to automakers and hedging its own risk exposure by holding physical cobalt. The bank declined to comment.
The CME exchange launched lithium futures trading for the first time last month, and the LME will also start trading lithium this year.
Goldman Sachs joined the LME’s Cobalt Committee in March 2020, becoming the first bank to become a member. Electric car manufacturer Tesla is also a member of the committee.
The bank has become a major investor in the transition to electric vehicles.it investment As part of the US$2.75 billion financing, Swedish battery company Northvolt invested about US$1 billion this week.
Goldman Sachs has a long history in commodity trading, which can be traced back to the acquisition of J Aron & Co in 1981. Former CEO Lloyd Blankfein rose through the commodities division.
However, in recent years, it has reduced some of its physical commodity business.
In 2014, after a U.S. Senate subcommittee claimed that it had caused aluminum prices to rise by moving metal between warehouses, it sold warehouse operator Metro International Trade Services — a charge the bank refuted.
[ad_2]
Source link
