Thoughts on this comment by Elon Musk on Lithium supply?, page-81

Apologies all this is off-topic but answering the questions.

@jamesduff

Good question. Each car consumes approximately 50kg of copper.

The problem with base metals is all the banks (JP Morgan (bought RBS - Sempra Commodities), Goldman Sachs, etc) and the Chinese built their own material warehouses to control and manipulate commodity prices. They made massive profits in the lead up to 2008 and then 2010 to 2012.

When the USA investigations began into Credit Default Swaps one of the recommendations that came out of this was that  banks were to stop proprietary trading and commodity physical warehouses. This caused a huge black hole in the futures market (eg. massive drop in liquidity) where you only need to put up 0.00001% of the value of the product you are seeking for delivery at x-date in the future.

We recently saw the Chinese residential market push up steel prices in a similar way. Then the Chinese exchanges increased the margin requirements to hold a steel contract / iron ore contract to get people out of the futures market.

The supply increases that occurred through to 2012 and the absence of banks has seen base metal prices plummet back to "real" levels.

Infrastructure and building construction (and associated follow on purchases - house hold appliances) are the bigger drivers and those sectors are all pulling back.

Hope this helps,
Super Ninja