The aggressive unwind of the AI trade combined with soaring oil prices is causing almost panic-like selling across the copper miners; RIO and Sandfire have tumbled 23% and 21% respectively below their 2026 highs. However, while selling gathers momentum across the sector, softness in the underlying industrial metal hardly registers on the chart below. However, we note, just as we’ve illustrated in the past, stocks often lead their related commodities.
At yesterday’s close, RIO was forecast to yield ~4.8% over the next 12 months, and this is likely to be closer to 5%, assuming it follows its peers lower this morning. The point being, a degree of safety is being built into these miners as they retreat from their 2026 highs. When/if we see a degree of calm return to the AI Trade &/or oil prices, the likes of RIO and SFR should snap back hard after the “weak longs” have sold into the recent sell-off.
- We’ve focused on RIO because it’s following our roadmap, but we believe the copper stocks are starting to factor in a worst-case scenario, affording solid risk/reward into further weakness.
MM is bullish toward RIO in the $142-$145 area
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chart
RIO Tinto (RIO) vs. Sandfire Resources (SFR) vs. LME Copper (US$/MT)
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RIO Tinto (RIO) vs. Sandfire Resources (SFR) vs. LME Copper (US$/MT)
