Base metal prices to rebound by end of year, analysts say: 2023 preview

Fastmarkets analysts are forecasting an increase in prices across the base metals complex by the end of 2023. Copper and nickel prices are expected to be the best performers next year and to show large increases by the end of 2023, with the speed of this growth heavily dependent on China’s economic recovery

The effects of the re-opening of China, the economic recovery of the United States and a less hawkish position from the US Federal Reserve Bank (the Fed) are predicted to become evident in the third or fourth quarters of 2023, and to lead to an overall improvement in the base metals market by the end of the year, according to Fastmarkets’ analysts Boris Mikanikrezai, James Moore, Andy Cole, Andy Farida and Yang Cao.

“These macro headwinds will turn into tailwinds,” Mikanikrezai said.

The re-opening of China will be one of the most important macroeconomic factors because China is the largest consumer of base metals. “As the phrase goes, when China sneezes, the world catches a cold,” Moore said.

There has already been positive macroeconomic sentiment from China for the year ahead. The country’s government has announced intended growth in gross domestic product (GDP) ranging from 4.5% to 5.5%.

The development in the US has been more difficult to predict. A recession is thought to be looming but how severe it will be, and how long it will last, is still uncertain.

The consensus among the analysts is that the recession will be mild. US inflation appears to have peaked, which may prompt the Fed to become less aggressive with its interest rate increases. This will put negative pressure on the value of the US dollar, which in turn will benefit base metal prices. “If you can predict what the dollar will do, you can almost predict what the base metals will do,” Mikanikrezai said.

The US Dollar Index closed at 103.38 on December 30, 2022, after reaching a high for the year of 114.24 on September 27. At the start of 2022, the index was much lower, at 96.19.

Fastmarkets’ team of analysts predicts the percentage changes in base metals prices, from the fourth quarter of 2022 to the fourth quarter of 2023, to be as follows:

  • Copper, +17.3%
  • Aluminium, -4.5%
  • Nickel, +12.7%
  • Zinc, +6.8%
  • Lead, +8.9%
  • Tin, +27.3%

And they predict the percentage change in the annual base metals price averages for 2023, compared with 2022, to be as follows:

  • Copper, +1.7%
  • Aluminium, -1.3%
  • Nickel, +4.6%
  • Zinc, -10.7%
  • Lead, +0.7%
  • Tin, -20.6%

The fourth quarter comparisons highlight a generally positive pattern, except for aluminium, which stands out as the only metal whose price is forecast to fall. But the year-to-year comparisons show mixed expectations.

According to the analysts, the annual comparisons “don’t really tell a good story because there has been so much volatility [in 2022]. High prices early in the year skewed the annual average higher,” Cole said.

The analysts forecast copper and nickel to be the best performers in 2023. The following is a breakdown for each base metal.


“Copper [and nickel] are heavily exposed to China and its expected economic recovery. Both will benefit from the growth in the electric vehicle [EV] market and both ended [2022] with critically low exchange stock levels,” Cole said.

Global copper stocks on the London Metal Exchange were 81,100 tonnes at the end of the year, while at the end of April they were 156,050 tonnes.

Although global nickel stocks were at a 14-year low on November 22, at 49,470 tonnes, a month later this had improved slightly to 54,444 tonnes.

The analysts forecast that the copper grade A cathode premium, cif Rotterdam, would go to $74 per tonne with rising production costs exerting inflationary pressure on European premiums. The premium was assessed at $50-100 per tonne on December 28.

According to the analysts, copper stocks are forecast to be in a deficit of 307,000 tonnes in 2022, which will drive prices higher when demand recovers.

This follows news of talks between Canadian miner First Quantum Minerals and the Panamanian government, intended to prevent the Cobre Panama mine, one of the world’s largest copper mines, from being suspended.

There is also the likelihood of copper concentrate shipment delays in the first quarter of 2023 due to a fire at Chile’s Ventanas port on December 22, 2022.

The copper concentrates TC index, cif Asia Pacific, fell by 1.5% following this news, but when assessed on December 30 the index had rebounded by 2.4% to $85.30 per tonne.


Like copper, nickel prices will very much depend on how China re-opens. High numbers of Covid cases in the East Asian country may negate some of the market’s enthusiasm in the first half of 2023.

Once the second quarter has passed, “demand should be seasonally stronger,” according to the analysts’ structured trade finance outlook for nickel.

“China’s Covid fight will have passed the worst months of the winter, Beijing’s stimulus efforts will be starting to bear fruit, and the US Federal Reserve should have adopted a less hawkish stance on rate rises. Nickel prices should be able to rise more sustainably from then,” they added.

There is uncertainty surrounding the Chinese EV market going into 2023, with market participants unsure whether demand will offset the 30% cut to buyer subsidies announced at the end of 2022.

Nickel sulfate is the main source of the nickel used in batteries. Fastmarkets assessed the price of nickel sulfate, min 21%, max 22.5%; cobalt 10ppm max, exw China, at 37,000-38,000 yuan ($5,352-5,496) per tonne on December 30.

With global production of lithium-ion batteries forecast to grow significantly in the coming years, demand for nickel from the battery industry is consequently likely to increase equally significantly. Fastmarkets’ researchers forecast that demand for nickel for use in EV batteries represents around 280,000 tonnes per year of nickel metal globally, which corresponds to around 10% of worldwide demand for nickel.

How well the Chinese automotive industry grows in 2023 will have an effect on nickel prices in the year ahead.

The nickel market in 2022 was characterized by low liquidity and volatile price swings on the LME. There has been confirmation that Global Commodities Holdings (GCH) will launch a spot trading platform for nickel in the first quarter of 2023, following growing discontent among market participants over price volatility and the LME’s suspension of nickel trading in March 2022.


According to the fourth-quarter comparisons above, aluminium is the only base metal forecast to fall in price. Despite the positive macroeconomic headwinds, the demand outlook for aluminium remains uncertain.

Analysts have been cautious about the aluminium forecast. By October-December 2023, the LME three-month aluminium price is forecast to be $2,177 per tonne, down from $2,227 per tonne in the last quarter of 2022.

According to Cao, demand destruction – when persistently high prices lead to less demand for a product – is a key reason for forecasting a reduction in aluminium prices.

“The reasons for the forecast are demand destruction, rising uncertainties around [the numbers of] Chinese Covid cases, and [US] Fed [bank] interest rate increases,” Cao said.

In the aluminium market, for example, particularly in Europe, high energy costs coupled with inflation hampered demand and supply in the second half of 2022.

This could change, however, depending on how Chinese supply and demand fare in the year ahead. “We project the refined aluminium market to be essentially balanced overall in 2022, as opposed to the modest 435,000-tonne deficit forecast previously,” Moore said.

Aluminium premiums showed a slight improvement by the end of 2022. For example, the aluminium P1020A premium, in-whs dup Rotterdam, inferred low carbon midpoint, was assessed at $225-225 per tonne on December 21, an increase of 2.27% compared with the previous assessment, perhaps suggesting some positive sentiment heading into 2023. It maintained that level until the year-end.

But not all of the aluminium market contracted in 2022.

Sectors such as the aluminium packaging sector reported gains despite the turbulent year, with some market participants describing it as “recession-proof” – and this is likely to continue into 2023.


The analysts forecast that tin could show strong gains by the end of 2023. But “that’s mostly a function of it normalizing after a big fall [in 2022],” Cole said.

The three-month tin price began 2022 at $39,195 per tonne. By December 20, it closed at $23,913 per tonne, a 39% reduction.

Tin is also dependent on how quickly, and successfully, China recovers economically because the country accounts for more than 40% of global tin consumption.


The analysts are bearish for LME zinc prices in the short term, and predict that three-month zinc prices will be at their lowest point in the first quarter of 2023, at $2,880 per tonne.

High energy costs have affected European smelters and there have been several cost-related smelter closures. While Nyrstar’s Budel zinc smelter has restarted, elsewhere a Nyrstar smelter in Auby, France, was recently placed on care and maintenance. There is an estimated 700,000 tonnes per year of capacity shuttered or operating at a reduced rate.

This, coupled with maintenance shutdowns under way in North America, is set to maintain structural tightness in the refined zinc market, putting further pressure on visible inventories despite weak demand.

By the fourth quarter of 2023, zinc prices are forecast to increase to $3,100 per tonne with macroeconomic sentiment improving in China and the US.


In the short term, the “LME lead demand outlook going into 2023 remains highly uncertain, with less optimism surrounding China’s reopening,” Farida said.

Much of the lead demand will come from the automotive industry, which uses lead-acid batteries in vehicles.

Lead’s economic fundamentals in the automotive industry are strong.

Lead demand tends to be seasonal because lead-acid car batteries need to be replaced and recycled at the height of summer and the peak of winter, creating inelastic demand for those months.

Moore points out that lead has an important role to play in the EV market as well. Compared with lithium batteries, lead batteries have a larger battery range and a long-established recycling infrastructure.

Moore believes therefore that lead will maintain its place within the EV sector in 2023 despite the competition from battery metals such as lithium.

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