Title: Measuring Critical Raw Material Dependence

Speaker: Lishu Zhang, Postdoctoral Researcher, CREST Finance Group

Host: Wenjian Xu, Associate Professor, Antai College of Economics and Management, Shanghai Jiao Tong University

Time: 10:00–11:30, Wednesday, November 11, 2026

Venue: Room 308, Haoran Building, Xuhui Campus, Antai College of Economics and Management, Shanghai Jiao Tong University

Brief introduction of the content: 

Geopolitical tensions and economic transitions make critical raw material supply disruptions a growing concern, but assessing their consequences requires knowing which firms depend on which materials. With language-model assistance, we reconstruct production paths from technical evidence and multiply input cost shares along each path to obtain a product’s marginal-cost elasticity to material prices. In our model, this elasticity also governs exposure to quantity shocks. We obtain 1,760 material–product dependence estimates across 47 critical raw materials and construct firm-level measures for 81,980 firm-years covering 13,301 firms. Comparisons with specialist reports and corporate filings support the measure and reveal how selectively dependence enters public information. The network contains an exact product or clear category counterpart for 84.2% of relationships identified in 124 specialist reports, but those reports cover only 1.2% of material–product relationships in the network for overlapping materials. Measured dependence is positive for 52.9% of current operational relationships disclosed in 10-Ks, whereas filings affirm only 8.5% of positive measured dependencies. Public information thus captures a narrow, salient subset of production dependence. The measures reveal within-firm co-dependence and substantial dispersion among industry peers. Among non-resource industry peers, greater CRM dependence is also associated with higher market-to-book ratios. As an application, we study cross-sectional market responses to material supply shocks and find that investors rarely price dependencies outside public attention.

Speaker's profile:

Lishu Zhang is a postdoctoral researcher in the Finance group at CREST and ENSAE, Institut Polytechnique de Paris. Her research spans international trade, environmental economics, and finance. She draws on trade and macroeconomic theory to guide empirical analysis of how economic transitions reshape capital allocation and redistribute risks across countries, firms, and investors. Her paper “Resistance and Arbitrage: International Trade in Brown Loans” received the Yihong Xia Best Paper Award at CICF 2025. Her current research extends to production networks, critical raw materials, and the role of artificial intelligence in financial analysis.

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