Investors should pay close attention as Australian mining giant BHP forecasts a rise in the value of commodities in 2023. These are vulnerable to geopolitical changes and unexpected market events, as we have seen with the war in Ukraine, when oil prices have soared to record highs. Which events resonate the most in the commodity market today, and will they affect the development of prices in 2023?

January 2023 brought easing in commodity markets, causing growth across the asset class. The mining company BHP comes with a positive outlook for the entire year 2023, which should be a year of growth for commodities. This is mainly due to growth in China, India and South Africa. The reopening of the communist country is having a significant impact on growth, especially in the transformation of the energy and automotive industries, which are predominantly iron and copper-based and are a significant source of income for BHP. Since October 2022, we could see the company's shares rise by around 30%.*

BHP Group Ltd.’s share performance over the last 5 years. (Source: Investing) *

BHP also adds South American and African countries among other growth opportunities. These will be the ones to go forward in the commodities mining sector as they are currently in the phase of seeking international capital and trying to attract further investment into these areas as they offer attractive tax conditions. In this respect, the commodities market could continue to develop for years to come.

Globally, the expectation is that the whole of 2023 will see prices rising more than in the second half of the calendar year 2022, when we saw pessimism about China's growth prospects. Non-ferrous metals should also grow, with roughly half of global demand coming from outside China.

Critical raw materials such as copper and nickel, whose supply is not expected to grow in the near term, should also be investment opportunities. However, demand is expected to be high. This will be influenced by population growth, urbanisation, infrastructure decarbonisation and rising living standards. These factors will also stimulate demand for steel, non-ferrous metals and fertilisers. [1]

For example, we are currently seeing a rise in the price of steel in the market. Following the earthquakes in Turkey, steel mills in the country have remained closed. Turkey is one of the world's top 10 steel producers and exporters. Its price is also affected by expectations of stronger demand from the Chinese steel consumer. Electric furnaces in China significantly increased production in the second half of February.

Adam Austera, chief analyst at Ozios

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.