Page 12 - BNE_magazine_12_2019 dec19

12 I Companies & Markets bne December 2019
The climate crisis induced stricter emission rules for cars, ballooning electric car sales and the lack of palladium mean prices could soar in 2020.
to be avoided, the Institute of International Finance (IIF) said in a note.
But at the moment we are on course to fail and miss the targets. Global CO2 emissions from transport grew 2% in 2018 – the second year in a row – yet government limits are reduced by 10% every two years in several key regions.
“The pollution generated from older generation ICE cars exceeds the limits set by new European and Chinese standards and road tests by 4-5x,” VTBC said. That means to meet
the challenge governments will start cracking down more aggressively on old cars and push populations to switch to EVs.
Tellingly, billionaire Elon Musk announced he will build
a “Gigafactory” Tesla electric car factory in Berlin next year, the first one outside of the US. Volkswagen has made the most aggressive move of the traditional auto companies into electric vehicles, announcing plans to invest €30bn to electrify its entire product line up over the next four years.
Europe needs an increase of 23% for EVs in the sales mix to meet its 2021 CO2 target. Global EV sales in 2018 were up 68%
to almost 2mn, 2.1% of light vehicle sales, as the public push for CO2-free transport exceeded expectations, reports VTBC.
“We expect the 2019F dip in sales to be transitionary, while, with faster battery technology evolution, we now not only see nickel demand from EVs rising to 594kt in 2025F, but also
an additional 200kt demand from other EVs, such as electric two-wheelers (from push scooters to motorbikes) and e-buses, mostly in Asia,” said VTBC.
Increasingly stringent emission rules will only increase the demand for palladium, which can convert car exhaust gas from CO2 into harmless water and oxygen and the demand has already been pushed up by new rules in Asia and Europe.
“Wider and faster application of China 6 than we had expected, as well as stricter laboratory and road tests under Euro 6d-TEMP, resulted in a 15-20% increase in palladium loadings in gasoline cars in 2019F,” reports VBTC. “We expect a busy pipeline of further ICE cars emissions tightening regulations until 2023F is to support 6.2% autocatalysts demand compound average growth rate (CAGR).”
At the same time, the metals producers are not ready for
a rapid uptick in demand as inventories are low. The demand for nickel in particular has been increased after Indonesia,
a major producer, brought forward a ban on exports to October.
“We expect the nickel market deficit to widen to 270kt
in 2020F. This would overwhelm the visible inventory by 2021F, driving prices from $17,625/t in 2020F to $23,000/t in 2023F, on our numbers,” VTBC estimates. “Our palladium price forecast is boosted to $1,750/oz and $1,890/oz in 2020F and 2021F, as we see neither end of deficit nor enough stocks to cover it.”
www.bne.eu
We have launched a new publication bneTech
A FREE newsletter covering technology, blockchain, ICOs, TMT and all aspects of the "new economy" in Emerging Europe, Central Asia and MENA.
bne:Tech
Click the button to read the latest issue
SIGN UP HERE