Franklin Templeton projects aluminium boom on growing electric vehicle demand

Growing demand for electric vehicles will create demand for materials other than lithium and cobalt over time. The switch from gasoline to electric will require infrastructural changes and that will consume good amount of copper and aluminium too, as said by Franklin Templeton’s fund manager Stephen Land. Lightweight metal aluminium is replacing steel in cars for better performance and fuel economy.

"With EV push, it’s hard not to feel optimistic for aluminium and copper demand," said Land, who co-manages the roughly $1.08 billion Franklin Gold and Precious Metals Fund.

Aluminium has seen a supply excess globally, which is mostly caused by China’s random production. The country however, is trying to reduce output based on environmental irregularities.

Land feels that this "supply/demand scenario would create an interesting setup over the medium-term" for both the metals. Aluminium turns out to be the best performing metal in 2017 on the Bloomberg Commodity Index after the Chinese government ordered output curbs and announced its plans to curtail another large volume of aluminium capacity during winter season to control pollution. This is helped by bullish demand coming from the automakers.

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Tesla Inc. is one of the key automotive companies driving demand for aluminium. The automaker has plans to produce more than 500,000 Model 3 vehicles per year, which is its newest electric car meant for the mass market.