Use-Specific Storage Premia and Market Stabilization for Critical Minerals in the Presence of Geopolitical Risk

Jamel Saadaoui, Russell Smyth, Joaquin Vespignani and Yitian Wang

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines how geopolitical risk affects metal prices and stockpiling when demand is unevenly distributed across end uses. We develop a Theory of Use-Specific Storage Premia, which posits that demand concentration and limited redeployability raise effective storage costs and weaken the stabilizing role of inventories/stockpiling. Using deterioration in United States–China political relations as a shock to forward-looking demand expectations, we estimate price and inventory responses for metals with well-established markets. Broad-use metals exhibit significant price declines and precautionary stockpiling following geopolitical deterioration, while use-specific metals display muted responses. Cross-sectional evidence links these patterns directly to use-specificity. The results imply that traditional stockpiling is structurally less effective for battery-linked critical minerals subject to geopolitical risk.

Keywords: Geopolitical risk; Critical minerals; Inventory and stockpiling; Energy transition; Commodity prices; Use-specific demand (search for similar items in EconPapers)
JEL-codes: F52 Q31 Q41 (search for similar items in EconPapers)
Date: 2026-02-11
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/128022/1/MPRA_paper_128022.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:128022

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().