ElimSouthern Copper (SCCO) is advancing within a Stage 2 uptrend, holding above a rising 30-week moving average. The chart shows a 22-week Cup Base with a 30.2% depth, currently forming without a handle, and the stock is 8.6% below its 52-week high. Market focus is on the cup pattern’s potential breakout above the 215.55 pivot, with overall sentiment bullish as the stock remains well above its 50-day and long-term moving averages.
Technical Analysis
As of 2026-08-05 · Close $197.0
Stage Analysis
Stage 2 (Advancing) — Price holding above a rising 30-week MA — uptrend intact
(30-week MA 6-week slope: 3.28%)
Detected Patterns — What the Market Is Watching
- Cup Base — depth 30.2%, length 22 weeks, pivot $215.55. Base formed from 2026-03-02 (left-side high) to 2026-08-05, with the low of $150.41 set on 2026-03-20
Minervini Trend Template — 7/8 Criteria Passed
| Criterion | Status |
|---|---|
| Price > 150MA & 200MA | ✅ Pass |
| 150MA > 200MA | ✅ Pass |
| 200MA trending up (>=1 month) | ✅ Pass |
| 50MA > 150MA & 200MA | ✅ Pass |
| Price > 50MA | ✅ Pass |
| Price >= 30% above 52wk low | ✅ Pass |
| Price within 25% of 52wk high | ✅ Pass |
| RS Line at/near 3-month high | ❌ Fail |
Price is -8.6% off its 52-week high and 121.4% above its 52-week low.
Pattern Sentiment
Bullish — offensive setup in place (composite score: 5)
Southern Copper Corporation (SCCO) — Institutional Research Report
Date: August 6, 2026 | Sector: Basic Materials | Industry: Copper | Exchange: NYSE
1. Company Overview &Amp; Business Model
Southern Copper Corporation is one of the world’s largest integrated copper producers, with mining, smelting, and refining operations primarily in Mexico and Peru. The company is a subsidiary of Americas Mining Corporation (ultimately controlled by Grupo México). SCCO benefits from a low-cost position, large mineral reserves, and a vertically integrated production chain spanning from mining to refined copper cathode and rod.
Revenue Streams &Amp; Product Mix (FY2025)
| Product | Estimated % of Revenue | Notes |
|---|---|---|
| Copper (cathode, concentrate, blister, anode) | ~78% | Core driver; realized price closely tracks LME copper |
| Molybdenum | ~8% | By-product credit; prices volatile |
| Silver | ~6% | By-product from copper mining |
| Zinc | ~4% | Produced at Charcas, Santa Barbara, and other Mexican mines |
| Gold & other | ~4% | Includes sulfuric acid, lead, and other minor metals |
Source: Company filings; product mix percentages are estimates based on historical segment disclosures.
Geographic Production Footprint (FY2025)
| Country | Operation | Estimated % of Copper Production |
|---|---|---|
| Mexico | Buenavista, La Caridad, El Arco (development) | ~55% |
| Peru | Toquepala, Cuajone | ~45% |
Note: The company also holds exploration concessions in Argentina, Chile, and Brazil, but these are not yet in production.
2. Supply Chain &Amp; Customer Base
Key Customers
SCCO sells a significant portion of its output to related parties (Grupo México’s industrial operations) and to global traders and fabricators. Major external customers are typically large copper fabricators in Asia, Europe, and North America. The company’s top customer (likely a related-party rod plant) accounts for an estimated 10-15% of revenue, but no single external customer exceeds 10% of total sales (estimate based on typical industry concentration).
Key Suppliers
| Input | Supplier Type | Estimated Cost Share |
|---|---|---|
| Electricity | State utilities (CFE in Mexico, national grid in Peru) | ~15-20% of cash costs |
| Diesel & explosives | Major energy and mining supply companies | ~10% |
| Steel (grinding media, liners) | Global steel producers | ~5-8% |
| Labor | Unionized workforce in Mexico and Peru | ~20-25% |
Estimates based on industry benchmarks and company cost disclosures.
3. Financial Statement Analysis
Balance Sheet Health (FY2025)
| Metric | Value | Assessment |
|---|---|---|
| Total Cash & Short-term Investments | $4.91B | Strong liquidity |
| Total Debt (incl. leases) | $7.41B | Moderate |
| Net Debt | $2.45B | Comfortable |
| Debt-to-Equity | 67.9% | Within normal range for capital-intensive miner |
| Current Ratio | 5.06x | Very strong |
| Quick Ratio | 4.41x | Very strong |
| Interest Coverage (EBIT/Interest Exp.) | 19.4x | Excellent |
Source: Balance sheet data provided (FY2025).
Income Statement &Amp; Margins (5-Year Trend + 2-Year Estimates)
| Metric | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E | FY2027E |
|---|---|---|---|---|---|---|
| Revenue ($B) | 10.05 | 9.90 | 11.43 | 13.42 | 15.20 | 15.80 |
| Gross Profit ($B) | 4.60 | 4.37 | 5.75 | 7.19 | 8.30 | 8.60 |
| Operating Income ($B) | 4.44 | 4.19 | 5.55 | 7.00 | 8.10 | 8.40 |
| Net Income ($B) | 2.64 | 2.43 | 3.38 | 4.33 | 5.10 | 5.30 |
| Diluted EPS ($) | 3.16 | 2.91 | 4.10 | 5.14 | 6.05 | 6.30 |
| Gross Margin | 45.8% | 44.2% | 50.3% | 53.6% | 54.6% | 54.4% |
| Operating Margin | 44.1% | 42.3% | 48.6% | 52.2% | 53.3% | 53.2% |
| Net Margin | 26.3% | 24.5% | 29.5% | 32.3% | 33.6% | 33.5% |
Source: Historical figures from provided income statement data. FY2026E and FY2027E are estimates based on current copper price forward curve (~$4.80/lb) and consensus production guidance.
Valuation Metrics
| Metric | Value |
|---|---|
| Market Cap | $164.36B |
| Trailing P/E | 28.9x |
| Forward P/E | 27.3x |
| PEG Ratio | 5.41x |
| Price/Sales (TTM) | 10.4x |
| EV/EBITDA (FY2025) | ~20.8x (calculated: (164.36+2.45)/8.02) |
Cash Flow Analysis
| Metric ($B) | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|
| Operating Cash Flow | 2.80 (est.) | 3.57 (est.) | 4.42 (est.) | 6.74 |
| Capital Expenditure | 0.95 | 1.01 | 1.03 | 1.33 |
| Free Cash Flow | 1.85 | 2.56 | 3.39 | 3.43 |
| FCF Yield | 1.1% | 1.6% | 2.1% | 2.1% |
Source: Provided cash flow data for FY2023-FY2025; FY2022 OCF/est. derived from FCF and capex figures.
Conclusion: SCCO is strongly cash-flow positive with a rising FCF profile, driven by elevated copper prices and disciplined cost control.
4. Risk &Amp; Catalyst Assessment
Key Risks (Next 12 Months)
- Copper Price Correction: A sharp decline in LME copper (currently ~$4.80/lb, estimate) would directly compress margins. The stock trades at a high multiple, amplifying downside sensitivity.
- Peruvian Political/Operational Risk: Community blockades or new government taxes in Peru could disrupt operations at Toquepala/Cuajone. Recent history includes temporary production halts.
- Mexican Regulatory Environment: Potential changes to mining concessions or water rights under the current administration could affect Buenavista expansion timelines.
- High Valuation Risk: At ~29x trailing earnings, the stock prices in a sustained copper supercycle; any demand disappointment (e.g., China property slowdown) could trigger multiple compression.
- Currency Volatility: MXN and PEN depreciation can impact local costs, though a weaker local currency is generally a tailwind for USD-reported earnings.
Catalysts (Next 12 Months)
- El Arco Project Progress: Development of the El Arco copper mine in Baja California (estimated capacity ~190k tonnes/year) could add significant growth; any permitting or construction milestone would be a positive catalyst.
- Copper Supply Deficit Narrative: Global copper concentrate supply remains tight; any further supply disruptions (e.g., in Chile or DRC) could push prices higher.
- Buenavista Expansion Ramp-Up: The Buenavista zinc concentrator and SX-EW expansions are expected to increase by-product credits and copper output.
- AI/Data Center Demand: Growing electricity grid and data center buildout is driving incremental copper demand; SCCO is a pure-play beneficiary.
- Dividend Increases: With FCF rising, the company may raise its dividend (current yield ~2.5%, estimate), attracting income-focused investors.
5. Competitive Landscape &Amp; Related Equities
| Company | Ticker | Market Cap (est.) | Key Differentiator |
|---|---|---|---|
| Freeport-McMoRan | FCX | $70B | Larger scale, Grasberg mine in Indonesia, more diversified |
| Anglo American | AAUKF / AAL.L | $45B | Diversified miner with significant copper exposure in Peru/Chile |
| Teck Resources | TECK | $25B | QB2 mine ramp-up in Chile; more leveraged to copper prices |
| First Quantum Minerals | FM | $15B | Panama mine (Cobre Panama) situation; higher risk profile |
| Ivanhoe Mines | IVN | $20B | Kamoa-Kakula in DRC; high-growth, lower-cost |
Related Equities (Frequently Mentioned Alongside SCCO)
| Ticker | Relationship |
|---|---|
| FCX | Direct peer; investors compare copper price sensitivity and production growth profiles. |
| COPX (Global X Copper Miners ETF) | SCCO is a top holding (~8-10% weight); flows into COPX directly impact SCCO demand. |
| GLEN.L (Glencore) | Major copper trader/producer; often seen as a value alternative with lower multiple. |
| HBM (Hudbay Minerals) | Mid-cap copper producer; used as a higher-beta play on the same copper thesis. |
6. Investment Thesis
Bull Case
- Copper Supercycle: Supply deficits through 2030 (driven by energy transition, grid investment, and AI data centers) support sustained high prices above $4.50/lb.
- Low-Cost Position: SCCO consistently ranks in the lowest quartile of the global cost curve, ensuring robust margins even if prices soften.
- Growth Pipeline: El Arco and Buenavista expansions could increase copper production by 20-30% by 2030 (estimate), providing organic growth optionality.
- Strong Balance Sheet: Net debt of $2.45B is manageable; FCF generation supports both growth capex and shareholder returns.
Bear Case
- Rich Valuation: At 29x trailing earnings and 10.4x sales, the market is pricing in perfection. Any copper price pullback to $3.50-4.00/lb could see EPS halve, making the stock vulnerable to a 30-40% drawdown.
- Country Risk: Peru and Mexico both present political/regulatory risks that are largely outside the company’s control.
- No Near-Term Production Growth: Until El Arco ramps (likely post-2028), production growth is limited to incremental expansions; the market may rotate to higher-growth peers.
- High Short Interest: Short interest of 23% of float (per provided data) indicates significant bearish positioning, which could exacerbate downside moves.
Capital Raising Activity (Last 6 Months &Amp; Projections)
| Period | Activity |
|---|---|
| Last 6 months (Feb-Aug 2026) | No equity issuance. Issued $993.8M in debt during FY2025 (per cash flow statement); no major bond offerings in H1 2026 (estimate). |
| Next 6 months (Aug 2026-Feb 2027) | Expected to fund capex (~$1.5B annualized) from operating cash flow; no new equity expected. Potential for opportunistic debt refinancing given strong credit metrics. |
7. Summary &Amp; Recommendation Framework
Southern Copper is a high-quality, low-cost copper producer with a pristine balance sheet and strong FCF generation. The company is well-positioned to benefit from long-term copper demand tailwinds. However, the current valuation leaves little room for error, and the stock’s high beta to copper prices makes it a volatile holding. Investors should weigh the compelling secular demand story against the elevated entry multiple and geopolitical risks inherent in its operating footprint.
Key metrics to monitor: LME copper price, quarterly production reports, El Arco permitting progress, and any changes to Mexican/Peruvian mining tax regimes.
Disclaimer: This report is for informational and educational purposes only and does not constitute investment advice. Data sourced from Yahoo Finance (as of August 06, 2026) and company filings; all estimates not explicitly sourced from the provided data are clearly labeled as such. The analysis may contain errors — always verify against primary filings (10-K/10-Q/8-K) before making any investment decision.
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