The S&P/ASX 200 Index (ASX: XJO) mining shares saw as many ups and downs as a rollercoaster last year. Hence, investors may be wondering what 2023 has in store after a crazy year.
Just look at the BHP Group Ltd (ASX: BHP) share price graph below. Investor sentiment swung all over the place.
Some ASX blue chips don't see that level of volatility, such as Telstra Group Ltd (ASX: TLS). Deep declines give investors the opportunity to buy mining leaders at a much cheaper price.
But, how are ASX 200 mining shares going to perform from here?
Firstly, I want to acknowledge the difficulty of trying to forecast what resource prices are going to do. With how linked the company share prices are to the resource prices, it's hard to judge.
Predicting the resources sector may be a fool's errand, but I'm a Fool – so here are my thoughts.
Big dividends
The current state of affairs seems to be pretty good for ASX 200 mining shares. The iron ore price is recovering, and so is the copper price. Indonesia is looking to ban exports of some key commodities like nickel, which could boost the Australian miners involved in those commodities, such as BHP.
I think the dividends from names like BHP, Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG) and South32 Ltd (ASX: S32) will still be very sizeable, though not as big as a couple of years ago.
ASX lithium shares like Pilbara Minerals Ltd (ASX: PLS) and Mineral Resources Limited (ASX: MIN) could also pay decent dividends.
Strong commodity prices
With China being a key purchaser of many commodities and the fact that lockdowns have ended in the country is a very positive step for a number of resources. I think that's the main reason why resource prices, like iron, have already jumped.
Will the rally keep going? Ultimately, time will tell. If I had to bet on it, I'd guess it will rise a bit higher from here – but not a lot higher – because there could be a bit of a lag between the end of lockdowns, and the stimulus and unleashed Chinese consumer fully flowing through the economy. It could take time before the 2023 peak for iron ore demand from China is reached.
While the global economy may be facing a difficult situation, with a potential recession after higher interest rates, I think the outlook is good for many commodities.
I think that demand for decarbonising resources, like lithium, copper and nickel, will be resilient as I believe the world will keep investing for a greener future, even if global GDP growth isn't firing on all cylinders.
ASX coal shares continue to benefit from the strong coal prices following the Russian invasion of Ukraine. I think this will mean ongoing good dividends for the rest of the year from coal miners, and possibly into 2024 as well.
Foolish takeaway
As long as the demand from China remains solid, I think it's going to be a good year for many of the ASX 200 mining shares. However, at these elevated levels, I'm not sure there are many miners that look like a steal right now.
