LME Copper 3-months (US$/MT)

As we’ve witnessed on the ASX, copper stocks have tumbled in recent weeks despite the industrial metal being fairly stable – the Global X Copper Miners ETF (WIRE) is trading around 30% below its January high. Copper stocks are struggling despite a relatively modest pullback in the metal itself, with copper falling around 4.5% from its September peak near US$14,900/t with three factors explaining the divergence:

• Tariff uncertainty: The unwinding of the US copper tariff trade has pressured miners, as uncertainty over potential tariffs on refined copper erodes the speculative premium that had boosted copper prices and equity valuations.
• AI and broader risk-off sentiment: Copper miners have become linked to the AI infrastructure trade, with investors expecting data centres and power-grid investment to drive demand. October’s technology sell-off, concerns about financing AI expansion and rising oil prices have weighed on mining stocks, amplifying the decline.
• Operational pressures and costs: Company-specific issues are adding to the pressure, including lower copper grades at BHP, falling production and higher unit costs at Southern Copper, and increased development capex at Newmont’s Red Chris project. Miners also face inflationary cost pressures and production risks that the copper price alone does not capture.

Copper retains support from tight physical supply and structural electrification demand, while mining stocks are being repriced for tariff uncertainty, operating risks and weaker investor sentiment; however, we believe this disconnect is maturing fast.

• We can see copper trading above US$15,000MT, but short-term it feels tired, which hasn’t helped the related stocks.