Industrial Metals Forecast 2023 – Global Recession Threatens Demand for Metals

Vladimir Zernov
Updated: Jan 3, 2023, 08:48 UTC

The risk of recession in leading economies poses a threat to demand for metals in 2023, though China's rebound should provide support. Copper, in particular, has the potential for a strong move if it can break above the $3.95 resistance level.


In this article:

Key Insights

  • Recession in the world’s leading economies is the key risk for industrial metals markets in 2023. 
  • While this risk is real, the rebound of China’s economy should provide enough support to demand for industrial metals. 
  • Copper should be ready for a strong move in case it manages to settle above the resistance at $3.95.

China Should Provide Support To Industrial Metals In 2023

Industrial metals are sensitive to changes in economic outlook, so the key question for 2023 is whether leading economies avoid a recession.

At this point, it looks that the EU and the UK economies will find themselves under significant pressure in 2023. While the European natural gas prices have pulled back from record highs, the energy crisis will remain a serious problem for the whole year.

In the U.S., the Fed is trying to orchestrate a soft landing. It remains to be seen whether Fed’s attempt will be successful as the central bank is mostly focused on inflation and plans to push rates above the 5.00% level, which will hurt economic activity.

China will be the bright spot in 2023 as the country reopens after several years of strict zero-COVID policy. The first months of the year may be challenging for China as the number of new coronavirus cases has skyrocketed. However, the situation will likely stabilize and China’s economy will serve as the main source of demand for industrial metals in 2023.

Market dynamics indicate that traders have already started to bet on the rebound of demand in China. Prices for copper, zinc, and aluminium have stabilized in October and have already started to move higher. China’s recent problems with coronavirus had a negative impact on traders’ mood, but it looks that the bottom has been already reached in the industrial metals segment.

Copper Must Settle Above $3.95 To Gain Upside Momentum


Copper will likely be the main beneficiary of the rebound of China’s economy. Taking a look at the weekly chart, the nearest resistance level for copper is located at $3.95. In case copper settles above the $3.95 level, it will move towards the next resistance at $4.15. A successful test of this level will push copper towards the resistance at $4.30. If copper gets above $4.30, it will head towards the next resistance level, which is located at $4.50.

On the support side, the nearest support level for copper is located at $3.75. If copper declines below this level, it will head towards the next support at $3.55. A successful test of the support at $3.55 will push copper towards the support at $3.35.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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