Investing in commodities in 2023


Saxo’s Jessica Amir views commodities as a market hedge with inflation softening but set to continue in the next 12 months.
Photo by Faisal Ramadhan/SOPA Images/LightRocket via Getty Images

Commodities – especially energy – are fundamentally the biggest driver of inflation. At its core, inflation is driven by supply vs. demand: inflation tends to follow when oil prices or raw materials rise. Commodities are the starting point of the supply chain. So those in mining for materials like copper, coal, lithium, aluminium and gold are best placed to profit from rising prices. On the other hand, retailers are likely to struggle to pass the full cost onto consumers.

While inflation is softening, the world’s supply problem appears set to continue in 2023. Energy prices are likely to keep soaring, which will likely continue to impact the value of coal and gas equities. Energy shares were some of the best performers in 2022. Metal prices have already rallied 20-50% from their lows, and given the supply; the outlook remains constrained. We think higher metal prices can be expected in 2023, supporting the shares of many big miners.

ESG and climate issues are also a factor for those considering investing in commodities. For example, Santos lost a court appeal to restart a $3.6 billion gas project, as the Indigenous people on the Tiwi Islands were not adequately consulted on the plan. They are set to apply for fresh approvals in the hopes of keeping the Barossa Gas Project on track to avoid any material losses.

Elsewhere, US-Australian coal producer Coronado cut its Australian production target for the year due to consistently wet weather caused by La Niña. This means the coal supply could remain somewhat lower shortly.

There is also significant optimism around the reopening of China, which should drive increased demand for raw materials for infrastructure development. I also expect Australian coal to be in higher demand, with China buying thermal coal from Australia for the first time in two years. India also continues to buy Aussie coal, with these countries being the biggest coal consumers.

With that in mind, here are some of the commodities we are keeping an eye on going forward.

Top commodities to watch in 2023

The copper price is starting to turn around hugely, up 28% from its July 2022 low. Copper supply is at generational lows, all while demand is expected to rise. And the lower US dollar is supporting buying of copper too. So the outlook for copper looks promising over the next 12 months.

Copper is critical in green transformation and also in housing. We believe with China reopening after three years, as it’s the largest consumer of copper, the price should be supported over the medium to longer term, especially as China’s EV market heats up. However, investors should ask themselves if they want exposure to the EV trend via Tesla or VW or companies selling commodities such as copper at a premium to car manufacturers.  

Iron ore

The primary steel-making ingredient has seen its price gain over 50% from its October low. Demand is likely to rebound for iron ore, while the iron ore supply is lower than it was a year ago. We think a rebound in the iron ore price could support respective equity markets (like Australia’s ASX) and those particular companies involved in producing and selling iron ore.


Conflict in Russia and Ukraine saw coal prices hit record highs in 2022, and it looks like solid demand for coal will continue in 2023 and beyond. Supply issues appear set to continue – and given Russia’s status as one of the world’s biggest coal suppliers, prices will be affected partly by the continued impacts of the Russia-Ukraine conflict.

Investors should be mindful of trends in coal, with demand generally peaking in January, and watch utility bills as a marker, with the Australian Energy Regulator warning that electricity prices will rise by up to 50% in 2023.

Also, be conscious of the long-term ambition for reduced reliance on coal in Australia and look for opportunities to gain exposure to trade with other coal-dependent nations such as India and China.

Oil and Gas

While the oil-producing nations, OPEC+, believe that demand will be greater than supply in 2023, they have taken early measures to reduce production and avoid the price bottoming out as it did during the 2008 recession.

For investors, this means oil and gas prices should theoretically remain elevated, with volatility likely to peak amid recessionary selling from hedge fund managers. I’d watch large energy producers with strong cashflows, especially those with a global distribution. These qualities afford pricing power and the ability to offset inflationary pressures, giving them the best shot at growing revenue margins. And rising earnings growth is a large contributor to share price growth.


Car producers like VW, Ford, GM and BMW are racing to produce more electric vehicles and phase out fuel-powered vehicles, notably, as about 31 countries vowed to be emission-free by 2050, with some countries planning to end the sale of fuel-powered engines by 2035.  Companies focused on lithium mining and processing will likely benefit from increased demand for renewable energy.

A word of warning, though. Lithium prices hit all-time highs in 2022, and it remains to be seen whether these highs will be replicated. Given the increased interest in green energy, however, this may be one to add to your stock portfolio.

Jessica Amir is a Markets Strategist at Saxo Markets

Please note that the stocks above were selected by an experienced financial analyst, but they may not be right for your portfolio. Before you decide to purchase any of these stocks, do plenty of research to ensure they are aligned with your financial goals and risk tolerance.

This article represents the views only of the interviewee and should not be regarded as the provision of advice of any nature from Forbes Australia.  The article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Past performance is not necessarily indicative of future performance. You should seek independent financial and tax advice before making any decision based on this information, the views or information expressed in this article.