Southern Copper Soars 3.67% as Copper Hits Record High Amid Tariff Fears and Supply Disruptions

Summary
• Southern Copper (SCCO) surges 3.67% to $160.05, hitting a 52-week high of $161.59
• Copper prices breach $13,000/ton for the first time, driven by U.S. import hoarding and mine disruptions
• Analysts warn of global supply shortages as U.S. stockpiles grow to 453,450 metric tons

SCCO’s explosive intraday rally mirrors the broader copper market’s frenzy, fueled by geopolitical tensions, U.S. tariff threats, and operational outages at key mines. With the stock trading at a 32.48 P/E ratio and a 1.34 PEG ratio, investors are betting on sustained demand from AI infrastructure and EV manufacturing. The 52-week low of $72.75 underscores the magnitude of this rally.

Copper's Record High and U.S. Tariff Uncertainty Fuel SCCO's Surge
Southern Copper’s 3.67% intraday gain is directly tied to the red metal’s historic $13,387.50/ton benchmark on the LME. The surge stems from a perfect storm: U.S. import tariffs threatening to raise costs by 15–30%, mine disruptions in Chile, Indonesia, and the DRC, and a global supply deficit projected to exceed 300,000 tonnes in 2026. SCCO’s low cash costs (<$2.00/lb) and 60%+ operating margins position it as a prime beneficiary of this price surge. Meanwhile, U.S. stockpiles have quadrupled since April 2025, creating artificial scarcity in global markets and amplifying speculative buying.

Copper Sector Rally Gains Momentum as SCCO Outpaces Peers
The copper sector is experiencing a synchronized rally, with Freeport-McMoRan (FCX) up 3.25% and BHP Group (BHP) gaining 2.67%. SCCO’s 3.67% move outpaces these peers due to its geographic focus on high-margin operations in Peru and Mexico. Analysts highlight SCCO’s 156,818-hectare concessions in Peru and its 502,688-hectare Mexican holdings as critical assets in a market where supply constraints are tightening. The company’s exposure to U.S. tariffs—via its domestic operations—further differentiates it from international miners.

ETFs and Options Highlight Bullish Momentum in Copper Sector
• MACD: 3.69 (above signal line 3.44), RSI: 68.94 (neutral), Bollinger Bands: $137.42–$152.37 (price at upper band)
• 200-day MA: $109.57 (far below current price), 30-day MA: $140.45 (supporting trend)

SCCO’s technicals confirm a short- and long-term bullish setup. The stock is trading above all key moving averages, with RSI indicating no overbought conditions. For leveraged exposure, consider iShares Copper and Metals Mining ETF (ICOP) at $48.03 (+2.67%) or VanEck Green Metals ETF (GMET) at $40.80 (+4.16%).

Top Options:
• SCCO20260116C160 (Call, $160 strike, Jan 16 expiry):
- IV: 39.13% (moderate), Leverage: 36.37%, Delta: 0.518 (moderate sensitivity), Theta: -0.3465 (high time decay), Gamma: 0.0366 (high sensitivity to price swings), Turnover: $104,210
- This call offers asymmetric upside if SCCO breaks above $160, with high gamma amplifying gains in a volatile environment. Projected 5% upside (to $168.05) yields a payoff of $8.05 per share.
• SCCO20260116C165 (Call, $165 strike, Jan 16 expiry):
- IV: 36.26% (moderate), Leverage: 76.20%, Delta: 0.328 (lower sensitivity), Theta: -0.2629 (high time decay), Gamma: 0.0359 (high sensitivity), Turnover: $696,911
- Ideal for aggressive bulls expecting a breakout above $165. A 5% move to $168.05 generates a $3.05 payoff, leveraging SCCO’s low cash costs and tariff-driven demand.

Action: Aggressive bulls may consider SCCO20260116C160 into a break above $160.50, while conservative traders can use SCCO20260116C165 for a higher-risk, higher-reward play.

Backtest Southern Copper Stock Performance
The backtest of SCCO's performance after a 4% intraday increase from 2022 to now shows favorable results. The 3-Day win rate is 54.28%, the 10-Day win rate is 53.89%, and the 30-Day win rate is 58.75%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 5.86% over 30 days, suggesting that SCCO can deliver decent gains even after the initial surge.

Bullish Setup Confirmed: Position for SCCO's Next Move
SCCO’s 3.67% surge is a microcosm of the copper market’s structural shift, driven by AI demand, U.S. tariffs, and mine outages. With the stock trading at a 32.48 P/E and a 1.34 PEG ratio, the rally appears justified by fundamentals. Watch for a test of the $161.59 52-week high and a breakdown below the $144.89 200-day MA as key signals. Sector leader Freeport-McMoRan (FCX) up 3.25% reinforces the sector’s strength. For traders, SCCO20260116C160 offers a high-gamma, high-leverage play on a breakout above $160.50.