ASX 200 mining shares have been on an interesting journey in 2022, whipsawing in a wide range between highs and lows.
The S&P/ASX 300 Metals and Mining Index (ASX: XMM) has held a 14.2% gain over the past 12 months, despite tracking 1.6% lower this year to date.
Meanwhile, various global factors – both geopolitical and macroeconomic – continue to drive hefty price swings in the broader commodity sector.
Baking all this in, the question now is what is the outlook for ASX 200 mining shares?
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Commodity demand to slow, or heat up?
Analysis on the direction of the broad commodity sector is mixed.
Those at investment bank UBS forecast commodity demand will slow in the coming six months.
This is primarily due to softening in demand from China. UBS analysts also said "prices for most commodities are still above cost support levels" and, thus, haven't priced in a recession.
Despite this, there are numerous selective opportunities around, according to UBS.
In a recent note to clients, the analysts said lithium shares continue to represent good value within the ASX 200 materials space.
UBS has buy ratings on IGO Ltd (ASX: IGO), Mineral Resources Ltd (ASX: MIN), and Allkem Ltd (ASX: AKE).
Meanwhile, the Refinitiv CRB Commodity Equity Index (CRBQX) has recovered from a key low point and is now shifting higher, regaining momentum.
As seen in the chart below, the index has pulled back sharply in the second half of 2022.
In the meantime, Brent Crude oil has fallen from its previous high of 8 June at US$120/Bbl to now trade at $93.8/Bbl. It has rallied from lows in recent weeks and remains up 15% for the year.
According to a note to clients from investment company Price Futures Group, it all points to lower diesel and gasoline supplies.
"The mantra we've been seeing in recent weeks is the economy is slowing and oil prices were down because of peak demand," it said.
However, it added, "These numbers seem to be holding up a lot better than people would think."
Meanwhile, in the ASX 200 energy space, AGL Energy Ltd (ASX: AGL) is now trading steady at $7.28 a share. The Origin Energy Ltd (ASX: ORG) share price is up 1.35% at $5.64 and Santos Ltd (ASX: STO) is 1.25% higher to $7.705 in today's session so far.
All three shares are in the green this year to date and have made a strong recovery from recent weakness earlier in the year.
