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Jun 14, 2024 ESG

Massively growing demand for natural resources

Increasing consumption in modern consumer society poses an ever-growing global challenge.

Natural resources companies play a crucial role in the global economy. According to estimates by the United Nations, human consumption of natural resources is expected to reach a staggering140 billion tons per year by 2050[1]. These resources include minerals, ores, fossil fuels, and biomass. Natural resources, also known as natural reserves, are biological, mineral, or aesthetic goods provided by nature without human intervention. They serve various purposes, whether economic or intangible. Examples include forests, surface and groundwater, fertile land, as well as energy resources such as oil, natural gas, and geothermal energy contained in rock layers.[2]

Natural resources are essential for our consumption of goods, whether through direct use or in the manufacturing and delivery process. They often face cyclical demand and occasional scarcity, driven by growing population and correspondingly increasing consumption. Given the pressure on finite resource reserves, we constantly seek solutions to circumvent material shortages. This can be achieved through research into substitutes, exploration of new deposits, material recycling, or the development of more efficient technologies. The dynamic interplay of supply and demand creates a challenging environment for global raw material companies.

Investment Traffic Lights

The monthly Investment Traffic Lights provide a detailed market analysis and our view on developments in the main asset classes. 

The monthly Investment Traffic Lights provide a detailed market analysis and our view on developments in the main asset classes. 

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Global material extraction is growing rapidly

Sources: Global Material Flows Database, DWS Investment GmbH as of 6/11/24

A characteristic feature of raw materials and associated companies is their diversity. Differences exist both between and within various categories of raw materials. While some commodities, such as industrial metals, are highly responsive to fluctuations in global demand – as Bloomberg data shows others such as energy are less elastic. Precious metals like gold, on the other hand, are sensitive to factors such as interest rates and inflation.[3]

Geopolitics also play a significant role in price determination and can lead to price volatility in both raw materials and the equities of raw materials companies. Risk premiums related to global conflicts and disruptions in supply chains influence demand for hedging raw materials prices and the valuation of companies. Examples of this include the COVID-19 crisis, ongoing conflicts in the Middle East, or the war in Ukraine. These substantial risks should be carefully considered.

Globally, the demand for materials has steadily increased over the past five and a half decades. Annual global raw material extraction rose from around 31 billion tons in 1970 to nearly 107 billion tons today[4]. The insatiable thirst for resources in modern consumer society poses an ever-growing global challenge.

  

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Jun 07, 2024 Americas

Not quite Taylored fit

When and how far U.S. interest rates should fall is quite a judgement call. Simple monetary-policy rules provide quite a wide range of plausible estimates.
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1. Decoupling Natural Resource Use and Environmental Impacts from Economic Growth. United Nations Environment Programme (2023).

2. Natural resource | Definition, Examples, & Facts | Britannica

3. Bloomberg L.P. as of 6/11/24

4. Global Material Flows Database. United Nations Environment Programme

This information is subject to change at any time, based upon economic, market and other considerations and should not be construed as a recommendation. Past performance is not indicative of future returns. Forecasts are based on assumptions, estimates, opinions and hypothetical models that may prove to be incorrect. Alternative investments may be speculative and involve significant risks including illiquidity, heightened potential for loss and lack of transparency. Alternatives are not suitable for all clients.

 

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This document is distributed to professional investors only and not others. Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

© 2024 DWS Investment GmbH

Issued in the UK by DWS Investments UK Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

© 2024 DWS Investments UK Limited

In Hong Kong, this document is issued by DWS Investments Hong Kong Limited. The content of this document has not been reviewed by the Securities and Futures Commission.

© 2024 DWS Investments Hong Kong Limited

In Singapore, this document is issued by DWS Investments Singapore Limited. The content of this document has not been reviewed by the Monetary Authority of Singapore.

© 2024 DWS Investments Singapore Limited

In Australia, this document is issued by DWS Investments Australia Limited (ABN: 52 074 599 401) (AFSL 499640). The content of this document has not been reviewed by the Australian Securities and Investments Commission.

© 2024 DWS Investments Australia Limited

  

DWS Investment GmbH, as of 6/11/2024-082244_160 (06/2024) (06/2025)

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