Metals and mining: 5 things to look for in 2023

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In 2022 war in Ukraine supercharged already-rampant inflation and China’s covid-zero policy continued to exacerbate a world-wide supply crunch. Price volatility and cost inflation reached record highs. It is premature to assume a return to normality in 2023. The energy crisis will persist, meaning input prices for commodity production and finished goods will stay high. What’s different this year is that we are firmly on the downward limb of the economic cycle as Governments (and investors) respond to the scourge of inflation, while consumers run for cover. The other major difference to last year - China’s emergence from its covid stupor - is perhaps just what the world needs, propping up global growth and ensuring 2023 is the bottom of the cycle. In this report our analysts identify key themes for the year ahead. Links to separate reports for each of the major commodities and commodity groups are provided below.

Table of contents

  • Economy: slowing growth but recovery around the corner
  • Supply: disruption likely to get worse before it gets better.
  • Energy transition: Driving demand growth and technology change in 2023
  • Prices: More turmoil in the offing
    • Steel: Respite for margins but demand growth uncertain
    • Expect Chinese property markets to improve, but be patient
    • Look for cost suppression to aid margin expansion for steelmakers
    • Watch for major investment decisions on new green metallic hubs
    • Iron ore: demand flat as China hot metal peaks, but watch for upside if economic rebound is stronger than expected
    • Negotiations for 2023 import volumes worth following as China's CMRG vies for influence
    • Simandou's credentials to improve again
    • Expect more from miner’s decarbonisation agendas
    • Metallurgical Coal: 2023 a chance for supply to shine
    • No end in sight for trade flow adjustment
    • Sunshine for Australia? Will supply finally outpace demand growth in 2023?
    • Crossover coal - enough is enough
    • Thermal coal: Another year of harvesting value
    • Price collapse likely, but mine margins to stay high
    • China reopening to undermine price, eventually
    • Supply recovering, but greenfield development gets harder still
    • Noble alloys: All eyes on the Chinese recovery
    • China's reopening sets the stage for growth
    • Vanadium use in batteries to double this year
    • Bulk Alloys: Adjusting to a changing landscape
    • Carbon border adjustment mechanism to offer respite for EU producers
    • Manganese taking a greater role in cathode chemistries
    • Silicon metal futures to become entrenched after debut in late 2022
    • Aluminium: searching for stability, and emissions cuts
    • No end yet for volatility in price premia
    • Renewable power to extend its reach in 2023 as low-carbon products proliferate
    • Can smelter production stabilise in the face of energy market tribulations
    • Copper: 2023 a stellar year for both supply and demand
    • Uneven Chinese growth rates keeps the market guessing
    • Can the market hold on to recent gains
    • Demand benefitting from energy transition targets
    • Will investors commit to new mining projects?
    • Nickel: Identity crisis makes compelling viewing
    • LME's dominant nickel contract future in doubt after catastrophic 2022
    • Hydrogen and battery recycling technologies to make a splash this year
    • Nickel raw materials and EV supply chain look for a future beyond Indonesia and China.
    • Zinc: New concentrate supply to ease burden of high power prices on smelter economics
    • China's trace element limits change arouses fears for concentrate flows
    • Confidence of the consumer will be key for zinc
    • Expect European producers to continue to manage smelter supply
    • Gold: benefitting from economic headwinds and a hint of chaos
    • M&A uptick likely with attractive valuations for some in a positive market
    • ESG Initiatives: Investor buy-in and cost savings to motivate more players to walk the talk
    • Royalty and streaming deals on the up as explorers seek alternative finance
    • Electric Vehicles and Battery Supply Chain: Time to take a breath?
    • China's decade-long EV incentive program to end, but tax breaks will make for a soft landing
    • OEMs will chase harder than ever for security in raw material and component supply
    • Supply chain sustainability rising on the priority list
    • Lithium: Can the exceptionalism continue?
    • Direct Saleable Ore (DSO) lithium to return with a vengeance in 2023
    • EV penetration to slow but lithium demand set for another year of 25% growth
    • Clamour for useable price indices to become deafening this year
    • Cathode and Precursor: Jockeying for position
    • Oversupply of LFP cathode but tightness in nickel-based cathodes
    • More optimised solutions for energy density, driving range, and safety in cathodes
    • Reality bites: Cathode and precursor materials prices to fall
    • Rare Earths: consigning 2022 to history
    • Consolidation in Chinese supply isn't finished yet
    • Offshore wind drivetrain preferences to take 2023 rare earth demand to new highs
    • Diversification of rare earth sourcing to accelerate

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