Assessing Southern Copper Corp's Short Interest Dynamics: Bearish Sentiment vs. Short Squeeze Risk in a Tightening Copper Market

Southern Copper Corp (SCCO) has long been a focal point for investors navigating the volatile copper sector, and its short interest dynamics in late 2025 reflect a tug-of-war between bearish positioning and the potential for a short squeeze. As of November 2025, SCCO's short interest stood at 8.57 million shares, representing 1.05% of its outstanding shares and 8.37% of its float size, with a days-to-cover ratio of 6.29. This marks a modest decline from October's 8.67 million shares but remains elevated relative to historical averages and industry peers. The stock's short interest ratio-while not at extreme levels-suggests moderate pessimism, particularly in a market environment where copper fundamentals are tightening rapidly.

Bearish Sentiment: Institutional Shorting and Structural Challenges

Institutional investors, including Jane Street Group LLC and Millennium Management LLC, have maintained short positions in SCCO, as disclosed in Form 13F filings. These positions likely reflect concerns about near-term operational risks, such as the company's exposure to volatile copper prices and potential regulatory headwinds. For instance, U.S. tariffs on refined copper have distorted global trade flows, creating a premium in domestic prices and locking in inventory, which could pressure SCCO's margins if production costs rise. Additionally, SCCO's short interest as a percentage of float-10.12% as of June 2025-far exceeds that of peers like Freeport-McMoRan (1.37%) and Teck Resources (2.91%), underscoring its status as a more contentious stock within the sector.

Copper Market Fundamentals: A Recipe for Short Squeeze?

However, the broader copper market's structural imbalances may tilt the scales toward a short squeeze. J.P. Morgan Global Research projects a global refined copper deficit of ~330,000 metric tons in 2026, driven by acute supply disruptions, including the Grasberg mine shutdown in Indonesia and operational challenges at Chile's Quebrada Blanca mine. These outages, combined with sluggish mine growth (projected at 1.4% for 2025) and surging demand from the energy transition and data-center expansion, have pushed LME copper prices to $11,200/mt by October 2025. Analysts from Morgan Stanley and Citic Securities forecast deficits of up to 590,000 tons and 450,000 tons, respectively, in 2026, with prices averaging above $10,000/mt.

The tightening market has already triggered speculative and industrial hedging activity, with palladium and platinum futures volumes surging in Q3 2025. For SCCO, a company directly tied to copper prices, this environment raises the risk of a short squeeze. A days-to-cover ratio of 6.29 means short sellers would need nearly six days to offload their positions at current trading volumes, a process that could accelerate if prices break higher. Historical data shows SCCO's short interest has declined by 5.8% over the past month, suggesting some short-covering has already occurred, but the high percentage of float (8.37% as of November) still leaves room for upward pressure.

Geopolitical and Macroeconomic Catalysts

Geopolitical tensions and U.S. fiscal policies further amplify the risk of a short squeeze. The U.S. tariff threat on refined copper has fragmented global supply chains, with COMEX prices outpacing LME benchmarks. This distortion benefits U.S.-listed copper producers like SCCO, which could see demand for their shares rise as investors hedge against supply shortages. Meanwhile, central bank buying and ETF inflows into gold and silver-resilient precious metals-highlight a broader risk-on sentiment that could spill over into copper equities.

Conclusion: Balancing Risks and Opportunities

For investors, SCCO's short interest dynamics present a dual-edged sword. While institutional shorting and regulatory risks warrant caution, the structural deficit in copper and speculative fervor in the sector create a compelling case for a short squeeze. The key variables will be the pace of mine production recovery, the trajectory of U.S. tariffs, and the extent of speculative positioning in copper futures. Given SCCO's elevated short interest and the sector's tight fundamentals, a sharp price rally could force short sellers into a scramble to cover, amplifying volatility.

As the market approaches Q1 2026, investors should monitor SCCO's short interest reports and copper price movements closely. The interplay between bearish positioning and tightening supply chains may yet deliver a textbook short squeeze, particularly if the Grasberg mine's output remains constrained and energy transition demand accelerates.