$Tesla (TSLA.US)$Producers of battery metals and specialist chemicals for electric cars are outpacing sector leaders like Tesla Inc. in the stock market as prices of key commodities climb due to tight supply and wider adoption of zero-emission vehicles.
$PILBARA MINERALS LIMITED (PILBF.US)$, a Perth-based supplier of lithium raw materials, jumped more than 210% this year to Thursday's close, while Ecopro BM Co. and L&F Co., both South Korea-based producers of cathode active materials, have risen more than 200%. The companies lead advances on the Bloomberg Electric Vehicles Total Return Index, which tracks 69 businesses including automakers and technology developers worth more than a combined $2 trillion.
“It's proven to be the case that the raw materials are scarce, and pretty quickly the margin has been pushed upstream,“ said Pilbara's Chief Executive Officer Ken Brinsden. The mining company, which has supply deals with firms including battery giant Contemporary Amperex Technology Co. Ltd., slashed output in mid-2019 as prices cratered, and has since rebounded on lithium's revival, expanding operations and acquiring a rival producer's project.
Battery production capacity is being added faster than supply chains can grow, leading to severe deficits of some components, and shortages of materials like copper foil. With demand so strong, miners and chemicals producers have been able to hike prices and swell profits.
“Investors are are paying more attention to components and metals suppliers as they look for hidden gems along the battery supply chain,” said Horace Chan, a Hong Kong-based chemicals analyst at Bloomberg Intelligence.
