Copper prices are soaring, will copper mining stocks have another "best year after 2016" in 2026?

As the trading price of copper futures in the United States continues to hit new highs, European copper mining stocks, which have been in a long-term slump in recent years, are about to end their best year since 2016. For the bullish forces of copper stocks in the global stock market, whether the next year can continue to rise strongly and achieve the best year since 2016 may depend on whether the copper futures prices in the United States can continue to break historical highs and whether LME copper prices can continue to rise and break historical highs in 2026. Analysts from Citigroup Inc. believe that commodity trading leader Glencore Plc is their top stock pick for 2026, and they expect the stock, which has been trending strong recently, to rise by about 15% in the next 12 months mainly because the company is working on increasing copper production. Oddo BHF believes that global mining giant Rio Tinto Group has a "very attractive development roadmap" in the copper business, and with its large project in Simandou, Guinea gradually progressing, Rio Tinto should be able to expand iron ore production. For mining investors, 2025 can be considered a year of explosive investment returns driven by the hot markets of copper, gold, and silver. The Stoxx 600 Basic Resources Index in the European stock market has risen 22% so far this year, ranking third among various industry groups in the European stock market. Maxime Kogge, a mining analyst at Oddo, stated that he remains bullish on mining stocks next year, but also warned that a significant slowdown in the Asian economy might disrupt market sentiment. "The copper theme should still be a positive driver in 2026 and one of the most worthwhile investment directions," the senior analyst said. "Other metals may have higher investment risks." As shown in the chart above, European mining giants' stock prices are on track for their best year since 2016, with copper and gold mining companies leading the way in European mining stocks. The LME copper price, considered a global economic barometer, has risen by over 30% so far this year, with the majority of the increase occurring in the past month, while U.S. copper futures prices are still at record highs. The strong rise in copper prices is not only benefiting from increased demand but also from the weakening U.S. dollar index (DXY) this year, making it cheaper for investors holding other currencies to purchase metals like copper. In addition, the global downward trajectory of interest rates led by the Federal Reserve and the European Central Bank has also been a core driver of copper prices. Copper is widely used in electricity, construction, industrial machinery, transportation, communication, and other areas, which are the core of global economic activity. Therefore, when governments implement policies to promote economic growth, and with new drivers of global economic growth such as artificial intelligence and energy transformation expanding capacity, the demand for copper in industrial production and infrastructure construction will increase significantly, leading to a rise in copper prices; conversely, if the pace of economic expansion stagnates or falls into economic recession, and if there is a lack of new drivers of global economic growth, the demand for copper will sharply decrease, and copper prices typically fall rapidly, hence the title of "Dr. Copper". In the era of artificial intelligence and digital transformation, the construction of data centers has experienced explosive growth in copper demand. The high-speed interconnection system of copper cables for power transmission and computational clusters in large AI data centers being heavily built by Microsoft, Google, Amazon, and Meta, as well as cooling systems and high-performance electronic devices, all rely heavily on copper. This structural new demand is gradually becoming a new growth engine for the copper market. Senior commodity market analyst Daniela Hathorn from Capital.Com also echoed this bullish view and investment stance. For copper and silver, prices are supported by supply shortages and increasing demand. However, if there are concerns about economic growth in important European or Asian economies next year, it will put pressure on the broader global mining market and bring drastic downward pressure on the stock prices of these copper mining companies. "Companies with a strong balance sheet and diversified mining giants that are more sensitive to copper futures trading prices appear to have the most advantage in 2026," the analyst said, citing Glencore, Rio Tinto, and Anglo American Plc. In Europe, stock market strategists led by Emmanuel Cau at Barclays Bank raised their outlook for global mining stocks to "overweight" for 2026, citing strong momentum in metal prices such as copper and continued good profit prospects. They noted that the sector has low valuations and relatively light investor positions, combined with broader global reflation trades and expectations of further loosening by the Federal Reserve, enhancing the sector's investment attractiveness. As shown in the chart above, European mining stocks with a core weight in copper mining are leading the way in the second half of 2025 in the Stoxx 600 index, the benchmark stock index for European stocks. This optimism is also reflected in business sentiment surveys. According to the Bank of America fund manager survey, European investors are currently net overweight in the mining sector by 4%, the first positive reading since June. UBS Group analysts have chosen copper, aluminum, and lithium as metal targets that may outperform market benchmark indices, citing continued supply constraints and increasing demand from energy, AI data centers, and the global defense industry. Among diversified mining companies, UBS analysts recommend Rio Tinto over Vale SA and BHP Group. "We still believe that some copper-related hot stocks with strong cyclical growth and sustained catalysts have very attractive risk-return characteristics," they wrote.