Southern Copper Shares Advance Amidst Rising Copper Prices and Rate Cut Expectations

Market Overview

U.S. equity markets observed varied performance recently, with the S&P 500 experiencing a daily loss of 0.13%, the Dow Jones Industrial Average declining by 0.27%, and the Nasdaq Composite retreating marginally by 0.07%. Amidst this broader market context, the Mining - Non Ferrous industry demonstrated resilience, reflecting a period of heightened activity within the commodities sector, particularly for copper.

Southern Copper Corporation Leads Gains in Mining Sector

Southern Copper Corporation (SCCO) has emerged as a focal point for investors, demonstrating significant momentum. Over the past month, SCCO shares have advanced by 14.66%, markedly outperforming the S&P 500's gain of 2.71% and the Basic Materials sector's increase of 6.19%. The stock closed at $108.52 after a recent session, following an intraday gain of 3.49%, and was trading at $110.47 as of September 19, 2025. This robust performance has led to SCCO being identified as a "trending stock" and "most watched" by Zacks.com users.

Drivers of Copper's Ascent and SCCO's Performance

The recent surge in SCCO's stock price is intrinsically linked to a significant rally in global copper prices. COMEX copper (HG=F) futures have soared to $4.726 per pound, equivalent to $10,419 per metric ton, a level not observed since mid-2024. London Metal Exchange contracts similarly reached $10,173 per ton, marking six consecutive sessions of gains. This upward trajectory in copper prices is underpinned by several key macroeconomic factors:

• Federal Reserve Expectations: Traders are positioning ahead of an anticipated 25 basis point rate cut by the U.S. Federal Reserve, with markets pricing in the likelihood of two additional cuts before the year's end. Such monetary easing typically weakens the U.S. dollar, making dollar-denominated commodities like copper more attractive to foreign currency holders.
• U.S. Dollar Weakness: A softer U.S. dollar has enhanced the buying power for international investors, channeling capital into commodities.
• Weakening Labor Data: Concurrent weakening U.S. labor data has contributed to falling U.S. Treasury yields, further supporting the attractiveness of commodities over fixed-income assets.

Beyond macro factors, SCCO's intraday surge was partly driven by technical indicators and speculative demand. The stock breached key moving averages, with the 30-day Moving Average (MA) at $97.89 and the 200-day MA at $95.08 acting as strong support. Technical momentum, evidenced by a MACD of 1.96 and an RSI of 70.3, indicates short-term overbought conditions and momentum-driven buying, particularly ahead of the September 19 expiration cycle.

Broader Market Context and Competitive Landscape

While SCCO demonstrated notable strength, other major miners also posted gains. Rio Tinto (RIO) advanced by 1.1%, Teck Resources (TECK) rose by 1.1%, and Hudbay Minerals (HBM) increased by 1.4%. In contrast, BHP (BHP) traded marginally lower, and Freeport-McMoRan (FCX) experienced limited upside, partly due to ongoing rescue operations at its Grasberg mine.

Despite the recent outperformance, a closer look at Southern Copper's Q2 2025 financial results reveals a mixed picture. The company reported a year-on-year revenue decrease of -2.16%, while most competitors saw an average revenue increase of 14.7% in the same quarter. Consequently, SCCO lost market share, which now stands at approximately 17.98%. However, the company maintained a strong net margin of 32.01%, surpassing that of its competitors, even as its net income growth of 2.4% year-on-year lagged behind the average competitor growth of 51.88%.

From a valuation perspective, Southern Copper currently holds a Forward P/E ratio of 23.28, which suggests a discount compared to its industry's Forward P/E of 24.88. However, its PEG ratio of 1.62 is considerably higher than the Mining - Non Ferrous industry average of 0.83, indicating a potentially less favorable growth-adjusted valuation.

Analyst Sentiment and Future Outlook

Analyst sentiment for Southern Copper shows positive revisions for earnings estimates. The Zacks Consensus Estimate for current quarter earnings has seen an 11.1% change over the last 30 days. For the upcoming earnings disclosure, an EPS of $1.11 is anticipated, representing a 3.48% year-over-year decline, alongside a revenue forecast of $3.09 billion, marking a 5.28% increase from the prior year. For the full year, Zacks Consensus Estimates project EPS of $4.72 (+9.01% year-over-year) and revenue of $12.29 billion (+7.52% year-over-year).

Despite these positive revisions and strong recent performance, Southern Copper currently holds a Zacks Rank #3 (Hold). This ranking suggests an expectation of market-in-line returns over the next few months. Historically, stocks with a Zacks Rank #3 have yielded an annualized return of 9.69%, slightly below the S&P 500's 11.29% annualized return.

The long-term outlook for copper prices remains robust. Analysts point to a convergence of factors including Chinese supply contraction, continued Fed-driven dollar weakness, and accelerating demand from global electrification initiatives. These conditions are anticipated to support higher copper prices through 2026. With COMEX copper (HG=F) stabilizing around $4.60 and testing $4.75 resistance, the risk-reward skew generally favors further upside, though potential volatility from tariffs and trade negotiations remains a critical risk factor. Copper equities, including SCCO, currently trade below historical enterprise value per resource pound metrics, suggesting a potential re-rating if projected supply deficits materialize. Investors will closely monitor SCCO's actual earnings performance and broader copper market dynamics in the coming quarters.