2026-01-26 02:50Summary of J.P. Morgan North America Metals & Mining 2026 Buy-Side Sentiment Survey Industry Overview - The survey focuses on the Metals & Mining (M&M) sector, with insights into investor sentiment for 2026 based on responses from 25 investors, divided into 72% Long Onlys (LOs) and 28% Hedge Funds (HFs) [1][12]. Key Findings Sector Rankings - Copper is the top-ranked sub-sector for 2026, followed by Gold. Steel has dropped significantly from 2nd to 7th place [1]. - Copper is also the top-ranked commodity, while Rare Earths and Steel have both seen a decline in their rankings [1]. - Freeport-McMoRan (FCX) is identified as the top long investment due to its strong correlation with copper prices (~95%) and exposure to gold pricing [1][6]. - Cleveland-Cliffs (CLF) is viewed as the top short investment due to high debt levels and tariff challenges [1][6]. Investor Sentiment - 72% of investors expect the M&M sector to outperform the broader market in 2026, a significant increase from 41% in the previous survey [1][12]. - The primary themes influencing sector performance are trade policy and protectionism, and onshoring and supply security [1][16]. Tariff Expectations - 78% of participants anticipate some form of S232 tariff relief in 2026, with 72% expecting partial relief [1][19]. - 61% expect exemptions for Mexico and Canada, while 39% foresee country-specific exemptions [1][19]. M&A Activity - A significant 84% of participants expect an increase in M&A activity within the M&M sector in 2026, up from 50% in the prior survey [1][80]. Commodity and Stock Preferences Copper - FCX is again ranked as the best-performing copper stock, with 83% of participants favoring it [1][64]. - Concerns about potential near-term corrections in copper prices were noted, alongside positive sentiment regarding the restart of Grasberg's operations [1][6]. Steel - Investor sentiment towards steel has weakened, with CMC emerging as the best-performing steel stock due to its high-margin precast business and favorable trade policies [1][60]. Aluminum - Alcoa (AA) is expected to be the best-performing aluminum stock, with 63% of votes, followed by downstream players CSTM and KALU [1][71]. Rare Earths and Uranium - MP Materials (MP) is viewed as the best-performing stock in the rare earths/lithium/uranium sector, receiving 56% of the votes [1][76]. Underappreciated Themes - Several themes were identified as potentially underappreciated, including: - Valuations relative to the AI ecosystem - Copper demand related to power sectors - Supply and demand dynamics in uranium [1][84]. Conclusion - The survey indicates a bullish outlook for the M&M sector in 2026, driven by strong expectations for copper and gold, alongside anticipated tariff relief and increased M&A activity. Investors are advised to consider these dynamics when making investment decisions in the sector [1][12][80].