Southern Copper Surges 2.43% Amid Copper Market Volatility: What’s Fueling the Rally?

Summary
• Southern Copper (SCCO) trades at $132.26, up 2.43% from its previous close of $129.12
• Intraday high of $132.77 and low of $130.66 highlight a volatile session
• UBS upgrades copper price forecasts to $13,000/ton by December 2026, citing supply deficits and demand from electrification
• SCCO’s options chain shows heavy activity in December 2025 contracts, with leveraged calls and puts trading at elevated volumes
• The stock’s 52-week high of $143.59 remains a key psychological barrier as copper fundamentals tighten. Today’s move reflects a confluence of sector-wide optimism and SCCO’s strategic positioning in a supply-constrained market.

Copper Market Divergence Drives SCCO Higher
Southern Copper’s 2.43% intraday gain is directly tied to UBS’s upgraded copper price forecasts, which now project $13,000/ton by December 2026. The bank attributes this to persistent mine disruptions—Freeport-McMoRan’s Grasberg mine suspension, slower recovery in Chile, and unrest in Peru—coupled with 2.8% annual demand growth from EVs, renewables, and data centers. SCCO’s low-cost production profile and exposure to Peru’s copper projects position it to benefit from tightening supply. Meanwhile, the 52-week high of $143.59 remains a critical resistance level, with bulls testing its validity as the stock approaches 94% of its annual range.

Copper Sector Rally Gains Momentum as FCX Follows Suit
The copper sector is rallying in lockstep with SCCO, as Freeport-McMoRan (FCX) surges 2.26% on news of its Grasberg mine’s delayed restart. UBS’s revised deficit forecasts—230,000 tons in 2025 and 407,000 tons in 2026—have amplified sector-wide optimism. SCCO’s 2.43% gain outpaces FCX’s 2.26% move, reflecting its lower production costs and strategic focus on Peru’s copper-rich regions. The sector’s synchronized rise underscores copper’s role as a critical enabler of the green transition, with SCCO’s technical setup suggesting it could outperform peers if the $132.66 Bollinger Band midpoint holds.

Options and ETFs Highlight Bullish Momentum in Copper Sector
• MACD: -1.008 (bearish divergence), Signal Line: 0.374, Histogram: -1.382 (negative momentum)
• RSI: 40.52 (oversold territory), Bollinger Bands: $119.65–$145.66 (SCCO at 94% of range)
• 30D MA: $132.25 (aligned with current price), 200D MA: $103.11 (long-term bullish)
• Support/Resistance: 30D: $138.21–$138.65, 200D: $96.77–$98.09
• Options Chain Liquidity: High turnover in December 2025 contracts, with SCCO20251219C130 and SCCO20251219P125 as top picks
• Key Levels: $132.66 (Bollinger Band midpoint), $138.21 (30D support), $143.59 (52W high)
• Short-Term Outlook: RSI in oversold territory suggests potential rebound, but MACD divergence warns of caution. Aggressive bulls may target $138.21 as a near-term pivot.
• Top Option 1: SCCO20251219C130 (Call) – Strike: $130, Expiry: 12/19, IV: 37.89%, Leverage: 20.16%, Delta: 0.604, Theta: -0.1479, Gamma: 0.0298, Turnover: 28,800. This call offers high leverage and liquidity, ideal for a 5% upside scenario (target $138.87). Payoff: $8.87/share if SCCO hits $138.87 by expiry.
• Top Option 2: SCCO20251219P125 (Put) – Strike: $125, Expiry: 12/19, IV: 39.42%, Leverage: 60.29%, Delta: -0.258, Theta: -0.0627, Gamma: 0.0241, Turnover: 1,552. This put provides downside protection with moderate delta and high gamma, suitable for volatility. Payoff: $7.87/share if SCCO drops to $120 by expiry.
• Hook: If $132.66 holds, SCCO20251219C130 offers leveraged exposure to a potential breakout above $138.21.

Backtest Southern Copper Stock Performance
Key take-aways1. Methodology • Every trading day from 2022-01-01 to 2025-11-26 was screened; if the close-to-close move was ≥ +2 %, the next day was tagged as an “event”. • 178 such events were found and evaluated with a 30-day holding window against a passive “buy & hold” benchmark of SCCO closes. 2. Results in brief • Average cumulative return after the surge: ≈ +3.9 % in 30 days, versus +3.3 % for the benchmark – a slim, statistically insignificant edge. • Win-rate drifts near 50–57 % throughout the window. • No single holding day shows significance at the 95 % confidence level, suggesting the 2 % jump is not a reliable stand-alone trading signal. 3. Practical implication • A 2 % pop in SCCO is not followed by meaningfully higher-than-normal performance. • If you intend to trade around such moves, it should be combined with other filters (e.g., copper price momentum, earnings calendar, or macro factors) to improve edge.Below is an interactive event-backtest panel with the full statistical breakdown. Feel free to explore each day’s win-rate and return curves.Notes on assumptions • “Intraday surge” was interpreted as a close-to-close jump because minute-level data were not requested; if you need true intraday (open-to-close or high-vs-open) please let me know and I’ll rerun with that definition. • The analysis uses closing prices (more liquid, free of bid-ask micro noise) and ignores transaction costs; adding slippage would slightly lower the realised returns.

Southern Copper’s Bullish Momentum: A Strategic Buy for Copper’s 2026 Outlook
Southern Copper’s 2.43% rally is a microcosm of the broader copper bull market, driven by UBS’s $13,000/ton 2026 target and structural supply deficits. While the MACD signals caution, RSI oversold levels and Bollinger Band positioning suggest a short-term rebound is likely. Investors should monitor the $132.66 midpoint and $138.21 support level. The sector leader, Freeport-McMoRan (FCX), is up 2.26%, reinforcing the sector’s strength. For those with a 3–6 month horizon, SCCO20251219C130 offers leveraged exposure to a potential 5% upside, aligning with UBS’s bullish thesis. Act now: Buy SCCO20251219C130 if $132.66 holds, or short SCCO20251219P125 for volatility protection.