Is 2023 Another Rocky Year For Commodities?

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As social and economic issues continue to rise globally, will next year’s commodity performance fluctuate, too?

2022 could have been better for commodity prices; it was a bumpy ride for the said industry. 

According to CMC markets, “As 2022 gives way to 2023, the global economy faces multiple issues, including stubbornly high inflation, monetary policy tightening, geopolitical instability, and impending recession. These factors are set to continue to have a negative impact on exploration financing.”

Even though metal prices peaked during quarter two of this year, it has descended as the demand returned to normal and the supply grew scarce.

The most stable metal is gold compared to other commodities on the list. Oil reached $130 a barrel due to the Russia-Ukraine conflict. Iron ore had its peak of $230 per tonne. 

But as 2022 wore on, the demand for iron ore—used to make steel—dramatically reduced as Covid lockdowns in China forced the temporary shutdown of businesses and construction sites.

Glencore is a Swiss multinational commodity trading and mining resource company currently performing well in stocks. This is due to their asset quality and diversification, which makes them more unique. This strategy gives them a competitive advantage against their competitors in the market.

Global macroeconomic conditions are predicted to intensify in 2023. Due to the potential fall in demand for mining and metals-related stocks and the potential for continued price volatility in commodities, this could have adverse effects on the mining and metals industries.

Additionally, in 2022 and 2023, the macroeconomic situation will probably continue to be crucial. The conflict between Russia and Ukraine and China’s response has dominated this year’s news for the global commodity markets. An oncoming global recession may impact business fundamentals in 2023.

As the demand for EV batteries spikes, copper is expected to have its optimal growth in 2023, aside from lithium. Yet, the government has to deal with environmental issues regarding ballooning demand. 

Countries have increased their renewable energy production as part of decarbonization efforts, which has increased the demand for raw resources and presented new difficulties for the commodities industry. The mining industry’s capacity to grow supply is outpacing the pace at which renewable energy is being introduced, which could result in a production shortfall in 2024.

“With copper a potential play in 2023, the world’s largest miner and Australia’s biggest company, BHP Group, in November bid AU$9.6bn (US$6.4bn) for Oz Minerals Ltd – Australia’s second-biggest copper miner after BHP. The proposed deal would position BHP to dominate the copper market,” CMC emphasised.

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