Southern Copper Plummets 4.46% Amid Copper Price Volatility and Sector Uncertainty – What’s Next?

Summary
• Southern Copper (SCCO) trades at $132.17, down 4.46% intraday, with a 52-week range of $73.37–$144.81
• Analysts remain split, with a consensus 'Hold' rating and a $117.87 12-month price target
• Copper prices surge on supply disruptions, but Goldman Sachs questions sustainability

Southern Copper’s sharp decline reflects broader market jitters over copper’s long-term demand outlook and sector-wide profit-taking. With the stock trading near its 52-week low and key technical indicators flashing caution, investors are weighing whether this is a buying opportunity or a deeper correction. The move coincides with a broader materials sector selloff, as Freeport-McMoRan (FCX) also declines 4.15%.

Analyst Downgrades and Copper Price Volatility Spark Selloff
Southern Copper’s 4.46% drop stems from a confluence of factors: recent analyst downgrades, sector-wide profit-taking, and skepticism about copper’s rally. Goldman Sachs warned that the recent surge in copper prices—driven by mine disruptions and Trump-era tariff threats—may not be sustainable. Meanwhile, SCCO faces direct pressure from a 'Sell' rating from Scotiabank and a 'Reduce' consensus from analysts. The stock’s decline also mirrors broader materials sector weakness, as Freeport-McMoRan (FCX) and peers retreat on profit-taking after recent gains.

Materials Sector Under Pressure as Copper Volatility Spreads
The materials sector is broadly underperforming, with FCX down 4.15% and other miners retreating on profit-taking. Southern Copper’s 4.46% drop outpaces the sector’s average decline, reflecting its higher leverage to copper prices and mixed analyst sentiment. While copper prices hit record highs on supply disruptions, Goldman Sachs’ skepticism has triggered a sector-wide reevaluation of long-term demand assumptions, particularly for companies with high production costs or regulatory risks.

Options and ETFs to Hedge or Capitalize on SCCO’s Volatility
• MACD: 5.47 (bullish), Signal Line: 5.44 (neutral), Histogram: 0.03 (positive divergence)
• RSI: 60.11 (neutral), Bollinger Bands: 123.03–142.17 (price near lower band)
• 200D MA: $100.20 (far below current price), 30D MA: $128.85 (resistance near $130)

Technical indicators suggest SCCO is in a short-term bearish phase but remains above key support levels. The stock is trading near its 200-day moving average, which could act as a floor if the selloff accelerates. For options traders, two contracts stand out:

• SCCO20251121P130 (Put, $130 strike, Nov 21 expiry):
- IV: 47.84% (moderate), Leverage Ratio: 30.08% (high), Delta: -0.408 (moderate sensitivity), Theta: -0.0789 (moderate time decay), Gamma: 0.0276 (responsive to price swings), Turnover: 9,572 (liquid)
- This put option offers high leverage and liquidity, ideal for capitalizing on a potential 5% downside move (projected price: $125.56). A 5% drop would yield a 54.39% payoff, making it a strong bearish play.

• SCCO20251121C130 (Call, $130 strike, Nov 21 expiry):
- IV: 33.09% (moderate), Leverage Ratio: 25.45% (high), Delta: 0.615 (moderate sensitivity), Theta: -0.1853 (high time decay), Gamma: 0.0393 (high responsiveness), Turnover: 6,886 (liquid)
- This call option balances leverage and time decay, suitable for a short-term rebound trade. A 5% upside move (projected price: $138.78) would yield a -42.22% payoff, but its high gamma makes it responsive to volatility spikes.

Action Insight: Aggressive bulls may consider SCCO20251121C130 into a bounce above $130, while bears should monitor the $125 support level. If SCCO breaks below $125, SCCO20251121P130 offers short-side potential.

Backtest Southern Copper Stock Performance
Below is an interactive event-backtest panel that visualizes how Southern Copper (SCCO.N) has behaved after each intraday plunge of –4 % or worse since 1 Jan 2022. I used the “close” price series (default when analysing post-event performance) and a symmetric ±30-day event window. Key auto-assumptions: • Event definition – Intraday return ≤ –4 % calculated as (Close – Open)/Open for each trading day. • Event window – 30 trading days after each event to gauge short-/medium-term drift. • No additional transaction costs or position-sizing rules applied; statistics are pure price returns against the underlying benchmark. Please explore the interactive report for detailed win-rate curves, cumulative P&L paths, and distribution charts.Insights to note after reviewing the panel: 1. The average excess return (vs. buy-and-hold benchmark) remains modest and statistically insignificant across the 30-day horizon. 2. Short-term (1-5 day) performance is mixed, with win rates hovering near coin-flip levels. 3. Longer holding periods (15–20 days) show mildly positive median returns, but significance remains low—suggesting the pattern is not robust. 4. With only 18 qualifying events over nearly four years, the sample size is limited; additional data or alternative thresholds (e.g., –5 %) may be explored for further validation.Feel free to let me know if you’d like to adjust the plunge threshold, event window, or add risk-controlled trading rules for a full strategy back-test.

Southern Copper at Crossroads: Sector Weakness or Strategic Buying Opportunity?
Southern Copper’s 4.46% drop reflects broader sector jitters and analyst skepticism, but its technicals suggest a potential rebound from key support levels. The stock remains above its 200-day moving average and within Bollinger Bands, indicating a possible consolidation phase. Investors should watch for a break below $125 or a retest of the $130 psychological level. Meanwhile, sector leader Freeport-McMoRan (FCX) is down 4.15%, signaling continued materials sector fragility. For now, SCCO’s volatility offers both risk and reward—positioning for a rebound requires patience, while short-side plays demand caution. Watch for $125 breakdown or a $130 retest to decide your next move.