Southern Copper Plunges 3.3% Amid Copper Market Volatility: What’s Next for the Red Metal Giant?

Summary
• Southern Copper (SCCO) trades at $144.54, down 3.33% from its previous close of $149.52
• Intraday range spans $144.32 to $146.99, reflecting sharp post-open correction
• Sector peers like Freeport-McMoRan (FCX) also decline, signaling broader copper miner pressure
• Analysts warn of overextended copper prices amid slowing Chinese demand and U.S. tariff uncertainty

Today’s sharp selloff in Southern Copper reflects a critical inflection point in the copper market. After a 70% year-to-date rally driven by AI-driven demand and supply constraints, the stock faces profit-taking pressure. With copper prices near $12,400/ton on the LME and Goldman Sachs forecasting consolidation in 2026, SCCO’s decline mirrors broader sector caution. The stock’s 3.3% drop underscores the fragility of momentum in a market where structural deficits and geopolitical risks dominate.

Profit-Taking and Overvaluation Concerns Trigger SCCO’s Sharp Drop
Southern Copper’s 3.3% intraday decline stems from a confluence of factors: 1) profit-taking after a 70% YTD rally, 2) caution over overextended copper prices (up 40% this year), and 3) macroeconomic headwinds. Analysts at Minmetals Futures note Chinese fabricators have cut production following recent price spikes, while U.S. tariff uncertainty under President Trump has created a 'Fortress America' premium. SCCO’s 144.54 price point, though still 3.3% below its 52-week high of 152.19, reflects a correction in a sector where Goldman Sachs expects $11,400/ton averages in 2026. The stock’s technical indicators—RSI at 66.26 (overbought) and MACD above signal line—suggest a short-term pullback is likely.

Copper Miners Unite in Selloff as Freeport-McMoRan Leads Decline
The copper sector is experiencing synchronized weakness, with Freeport-McMoRan (FCX) down 2.9% premarket and SCCO following suit. This mirrors broader LME copper dynamics, where prices surged 6.8% on Monday but settled 2.3% higher at $12,398.5/ton. The sector’s pain reflects dual pressures: 1) Chinese demand softening as smelters cut output due to zero TC/RC fees, and 2) U.S. stockpiling driven by tariff speculation. While SCCO’s 144.54 price remains resilient against its 200-day MA of 108.31, the sector’s collective retreat highlights vulnerability in a market where structural deficits and geopolitical risks dominate.

Options Playbook: Capitalizing on SCCO’s Volatility with Strategic Puts
• 200-day MA: 108.31 (well below current price)
• RSI: 66.26 (overbought)
• MACD: 3.95 (bullish), Signal: 3.45
• Bollinger Bands: 133.23–151.12 (current price near lower band)
• Key support: 140.08–140.67 (30D), 96.32–97.80 (200D)

Technical indicators suggest SCCO is overbought but remains above critical support levels. The stock’s 3.3% drop creates opportunities for short-term options plays. Two top options from the chain stand out:

• SCCO20260116P140 (Put):
- Strike: 140, Expiry: 2026-01-16
- IV: 37.09% (moderate), Leverage: 49.75%, Delta: -0.34, Theta: -0.0567, Gamma: 0.0300
- Turnover: 1,715 (high liquidity)
- Payoff at 5% downside (137.31): $2.69 gain per contract
- This put offers balanced risk/reward with strong gamma for price sensitivity and moderate IV.

• SCCO20260116P145 (Put):
- Strike: 145, Expiry: 2026-01-16
- IV: 32.03% (reasonable), Leverage: 32.06%, Delta: -0.506, Theta: -0.0195, Gamma: 0.0378
- Turnover: 6,680 (exceptional liquidity)
- Payoff at 5% downside: $7.69 gain per contract
- This put benefits from high gamma and deep in-the-money positioning, ideal for aggressive short-side bets.

Aggressive bulls may consider SCCO20260116P140 into a bounce above $140.08 support. If $137.31 breaks, SCCO20260116P145 offers substantial downside capture.

Backtest Southern Copper Stock Performance
The backtest of SCCO's performance after an intraday plunge of -3% from 2022 to now shows favorable results, with win rates and returns indicating the stock's resilience and potential for positive gains in the following days:

Southern Copper at Crossroads: Defend $140.08 or Face 200D MA Test
Southern Copper’s 3.3% drop signals a critical juncture in its 70% YTD rally. While the stock remains above key 30D support at 140.08, a breakdown could trigger a test of the 200D MA at 108.31—a level that would validate bearish macro narratives. Sector leader Freeport-McMoRan’s 2.9% decline underscores the fragility of copper miner valuations in a market where Goldman Sachs forecasts $11,400/ton averages in 2026. Investors should monitor SCCO’s ability to hold above 140.08 and consider the SCCO20260116P145 put for a 5% downside scenario. The path of least resistance appears lower, but a rebound above 146.99 intraday high could reignite bullish momentum.