Southern Copper Surges 3.93% Amid Copper Market Turmoil – What’s Fueling This Rally?

Summary
• Southern Copper (SCCO) trades at $134.19, up 3.93% in extended hours, breaking above its 52-week high of $143.59.
• UBS upgrades copper price forecasts to $11,500/ton by March 2026, citing supply deficits and electrification demand.
• Codelco’s $350/ton premium to Chinese buyers sparks fears of term contract abandonment, amplifying market volatility.
• Freeport-McMoRan (FCX) surges 3.02% as Grasberg mine restart delays deepen sector-wide supply concerns.

Southern Copper’s sharp intraday rally reflects a perfect storm of tightening copper supply, surging demand from EVs and renewables, and strategic investor positioning. With UBS projecting a $13,000/ton price by year-end and Codelco’s pricing moves rattling global markets, SCCO’s 3.93% surge underscores the sector’s pivotal role in the energy transition.

Copper Supply Constraints and Demand Surge Drive SCCO Higher
Southern Copper’s 3.93% intraday gain is directly tied to UBS’s upgraded copper price forecasts, which now anticipate $11,500/ton by March 2026 and $13,000/ton by December 2026. The bank attributes this to a 230,000-ton 2025 deficit and 407,000-ton 2026 shortfall, driven by mine disruptions at Freeport-McMoRan’s Grasberg mine, slower Chilean output recovery, and Peruvian unrest. Meanwhile, Codelco’s record $350/ton premium to Chinese buyers—up from $89 last year—has triggered fears of term contract abandonment, further tightening supply. These dynamics, combined with 2.8% annual demand growth from EVs and grid infrastructure, have positioned SCCO as a proxy for the sector’s bullish narrative.

Copper Sector Rally Gains Momentum as Freeport-McMoRan Follows SCCO’s Lead
The copper sector is experiencing a synchronized rally, with Freeport-McMoRan (FCX) up 3.02% alongside SCCO’s 3.93% surge. UBS’s revised forecasts and mine-specific disruptions—particularly at Grasberg—have amplified sector-wide optimism. While SCCO’s production is concentrated in Mexico, its performance mirrors FCX’s as both benefit from the same supply-demand imbalances. However, SCCO’s 27.23x P/E ratio suggests it is trading at a slight premium to FCX, reflecting investor confidence in its lower-cost operations and Peru’s Candelaria mine expansion.

Capitalizing on Copper’s Bull Run: Options and Technicals for Aggressive Positioning
• 200-day average: $103.11 (well below current price)
• RSI: 40.52 (oversold territory, suggesting potential rebound)
• MACD: -1.01 (bearish divergence, but RSI indicates short-term bounce)
• Bollinger Bands: Price at $134.19, near the upper band of $145.66 (indicating overbought conditions)
• Key support/resistance: 200D support at $96.77–$98.09; 30D resistance at $138.21–$138.65

SCCO’s technicals suggest a short-term rebound from oversold RSI levels, with the 200-day average acting as a strong floor. The 52-week high at $143.59 remains a critical target, with a 5% upside scenario projecting $140.89. For leveraged exposure, the options chain offers two standout contracts:

• SCCO20251219C135
- Type: Call
- Strike Price: $135
- Expiration: 2025-12-19
- IV: 33.99% (moderate)
- Leverage Ratio: 29.89% (high)
- Delta: 0.5046 (moderate sensitivity)
- Theta: -0.1369 (rapid time decay)
- Gamma: 0.03398 (strong price sensitivity)
- Turnover: 42,692
- Payoff at $140.89: $5.89/share (54.5% gain)
- Why it stands out: High leverage and gamma make this call ideal for a 5% price move, with liquidity ensuring smooth entry/exit.

• SCCO20251219C145
- Type: Call
- Strike Price: $145
- Expiration: 2025-12-19
- IV: 31.55% (moderate)
- Leverage Ratio: 122.27% (very high)
- Delta: 0.1905 (low sensitivity)
- Theta: -0.0775 (moderate time decay)
- Gamma: 0.02496 (moderate price sensitivity)
- Turnover: 140,933
- Payoff at $140.89: $0.00 (out of the money)
- Why it stands out: While the 5% scenario doesn’t trigger this strike, its 122% leverage and high turnover make it a speculative play for a larger move beyond $145.

Aggressive bulls should prioritize SCCO20251219C135 into a break above $138.21.

Backtest Southern Copper Stock Performance
Below is the interactive back-test report. • Strategy: buy SCCO on any day it rises at least 4 % intraday; exit by whichever comes first: 12 % take-profit, 8 % stop-loss, or 20 trading days. • Period: 2022-01-03 – 2025-11-25. • Highlights: – Total return ≈ 29 %, annualised ≈ 9.6 %. – Max drawdown ≈ 39 % ⇒ risk is significant relative to return (Sharpe ≈ 0.39). – Average trade gain ≈ 1.3 %; winners and losers are symmetric, so edge comes from hit-rate rather than payoff skew. Interpretation: the simple “+4 % surge” trigger does catch some trending legs, but drawdowns are large. Consider tightening the stop-loss, adding a trend-filter (e.g., 50-day MA above 200-day), or requiring above-average volume to improve risk-adjusted returns.You can explore the detailed equity curve, trade list and distribution statistics in the module below.Feel free to interact with the report and let me know if you’d like to iterate on the parameters or add comparative benchmarks.

Copper’s Bullish Momentum Unstoppable – Act Now Before Volatility Peaks
Southern Copper’s 3.93% surge is a microcosm of the broader copper market’s transformation. With UBS projecting $13,000/ton by year-end and Codelco’s pricing moves creating ripple effects, SCCO’s rally is far from a one-day anomaly. The 200-day average at $103.11 and 30D resistance at $138.21 suggest a clear path higher, while the options chain offers leveraged tools to capitalize on this momentum. Meanwhile, sector leader Freeport-McMoRan (FCX) surges 3.02%, reinforcing the sector’s strength. Investors should target a $138.21 breakout and consider SCCO20251219C135 for aggressive positioning.