Massively growing demand for natural resources

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.^[1]

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^[2]. The insatiable thirst for resources in modern consumer society poses an ever-growing global challenge.