Teck Resources Plunges 5.5%—Is the Copper Giant Facing a Perfect Storm?

Summary
• JPMorgan downgrades TECK to Neutral with $41 price target amid QB2 project delays
• Intraday price drops to $33.15, a 5.5% slide from $35.12 previous close
• Highland Valley mine extension sanctioned at $2.1–2.4 billion, offsetting $722M Q2 EBITDA gain
• Sector leader Freeport-McMoRan (FCX) rises 0.57%, while S&P Metals & Mining ETF declines 1.5%

Teck Resources Ltd (TECK) has tumbled over 5% in a single session, dragged down by a JPMorgan downgrade and production delays at its QB2 copper project. The stock’s freefall contrasts with the broader copper sector’s mixed performance, as investors weigh the company’s $8.9 billion liquidity cushion against operational headwinds. With copper prices near record highs and a 50% US tariff looming, the market is now dissecting whether TECK’s selloff is a buying opportunity or a warning sign for the sector.

JPMorgan Downgrade and Production Hiccups Send TECK Into a Tailspin
The sharp 5.5% decline in TECK’s stock price on July 25, 2025, was catalyzed by JPMorgan’s downgrade from Overweight to Neutral and a cut in FY25/26 EBITDA estimates by 6% and 4%, respectively. The firm cited delays at the QB2 project, where TMF upgrades, weather disruptions, and transition ore challenges are derailing production timelines. Compounding the issue, TECK’s $2.1–2.4 billion Highland Valley mine extension—a project expected to double copper output by the end of the decade—has raised concerns about capital allocation and execution risks. Meanwhile, the company’s $1.1 billion year-to-date shareholder returns, while impressive, failed to offset investor skepticism about near-term cash flow sustainability.

Copper Sector Mixed as Freeport-McMoRan Outperforms
While TECK’s 8.7% drop starkly contrasts with the S&P Metals & Mining ETF’s 1.5% decline, sector leader Freeport-McMoRan (FCX) has bucked the trend, rising 0.57%. The divergence highlights TECK’s vulnerability to operational execution risks, particularly in its QB2 project, compared to FCX’s diversified copper-gold portfolio and stronger production visibility. Copper prices, however, remain a tailwind at $5.78 per pound, with the 50% US tariff scheduled for August 1 adding short-term volatility. Analysts note that TECK’s exposure to single-asset copper projects makes it more susceptible to sector-specific disruptions than peers with broader commodity exposure.

Bearish Momentum and High Volatility: Navigating TECK's Options
• RSI: 24.14 (oversold)
• MACD: -0.342 (bearish divergence)
• 200D MA: $41.10 (far above current price)
• Bollinger Bands: Price at lower bound ($35.69)

Technical indicators confirm a short-term bearish bias for TECK, with the stock trading well below its 200-day moving average and RSI signaling oversold conditions. Key support levels to watch include the 200D MA pivot at $38.16 and the lower Bollinger Band at $35.69. A breakdown below $32.50 could trigger a test of the 52-week low at $28.32. The most liquid options contracts offer asymmetric risk/reward for short-side players.

Top Put Option: TECK20250801P32.5
• Code: TECK20250801P32.5
• Type: Put
• Strike Price: $32.50
• Expiration: 2025-08-01
• Implied Volatility: 37.07% (mid-range)
• LVR: 83.12% (high leverage)
• Delta: -0.325 (moderate sensitivity)
• Theta: -0.0074 (slow decay)
• Gamma: 0.197 (high sensitivity to price swings)
• Turnover: 6,446 (high liquidity)

• Implied Volatility: 37.07% suggests market uncertainty
• LVR: 83.12% indicates significant price amplification potential
• Delta: -0.325 offers balanced directional exposure
• Gamma: 0.197 ensures rapid response to price drops
• Turnover: 6,446 confirms strong liquidity for entry/exit

Second Put Option: TECK20250801P32
• Code: TECK20250801P32
• Type: Put
• Strike Price: $32.00
• Expiration: 2025-08-01
• Implied Volatility: 36.92% (mid-range)
• LVR: 133.00% (very high leverage)
• Delta: -0.230 (moderate sensitivity)
• Theta: -0.0109 (moderate decay)
• Gamma: 0.167 (high sensitivity)
• Turnover: 53 (limited liquidity)

• Implied Volatility: 36.92% aligns with market expectations
• LVR: 133.00% offers explosive upside in a bearish scenario
• Delta: -0.230 provides directional protection
• Gamma: 0.167 ensures responsiveness to price declines
• Turnover: 53 suggests limited liquidity, requiring caution

Payoff Assumptions:
• 5% downside from $33.195 = $31.53 target
• TECK20250801P32.5: max(0, $31.53 - $32.50) = $0.97 gain (29.7% return on strike price)
• TECK20250801P32: max(0, $31.53 - $32.00) = $0.47 gain (14.7% return on strike price)

If $32.50 breaks, TECK20250801P32.5 offers short-side potential with a 29.7% projected gain. Aggressive bulls may consider TECK20250801C32.5 into a bounce above $34.50, but bearish momentum remains the dominant theme.

Backtest Teck Resources Stock Performance
Backtesting the performance of Teck Resources (TECK) after a -5% intraday plunge shows a generally favorable short-term outlook, with positive returns in the immediate aftermath of the drop. Here's a detailed analysis based on the backtest data:1. Short-Term Gains: Following a -5% intraday plunge, TECK exhibited a 3-day win rate of 51.72%, indicating that over half of the time, the stock price recovered and gained value within 3 days of the plunge.2. Cumulative Returns: The 10-day win rate was even higher, at 62.16%, suggesting that a larger proportion of the time, the stock price showed positive gains within 10 days of the plunge.3. Maximum Return: The maximum return observed during the backtest period was 7.64%, which occurred on the third day after the plunge. This highlights that while the stock price had a strong recovery, the potential for large gains was somewhat limited.4. Probability of Recovery: The backtest data shows that there was an 84.47% probability of the stock price recovering within 10 days of the plunge, which is a reassuring indicator for investors looking to hold their position through a short-term volatility.

TECK’s Freefall: When to Re-Enter or Cut Losses?
The 5.5% drop in TECK reflects a perfect storm of operational delays, regulatory skepticism, and sector-specific volatility. While the company’s $8.9 billion liquidity buffer and Highland Valley mine extension offer long-term optimism, near-term execution risks at QB2 and the looming US tariff create a high-risk profile. Investors should monitor the $32.50 support level and JPMorgan’s next guidance revisions. Sector leader Freeport-McMoRan (FCX) rising 0.57% suggests the broader copper sector remains resilient, but TECK’s concentrated exposure to single-asset projects demands caution. Watch for a breakdown below $31.50 or a rebound above $34.50 to dictate next steps.