Southern Copper Shares Surge to Unprecedented Peak Amid Supply Squeeze

Southern Copper Corporation's stock has soared to a record-breaking $153.65 per share, capping off a remarkable 12-month total return of 72.5%. This surge is fueled by a historic tightening in global copper inventories and prices reaching unprecedented levels. A critical question now emerges: can the mining giant meet escalating demand within this constrained market environment?

The company's recent financial performance has been a key catalyst. For the third quarter of 2025, Southern Copper reported earnings per share (EPS) of $1.35, surpassing analyst expectations of $1.26. Revenue for the period came in at $3.4 billion, also exceeding the consensus forecast of $3.19 billion. The firm maintains robust profitability metrics, including a return on equity (ROE) of 38.74% and a net margin of 30.98%. Shareholders are currently benefiting from a quarterly dividend payment of $0.90 per share, translating to an annualized yield of 2.42%.

The Fundamental Driver: A Market in Deficit

The core narrative underpinning the rally is a profound imbalance between copper supply and demand. Industry analysis projects a significant shortfall of approximately 308,000 metric tons of refined copper by 2026. Global demand is estimated to be growing at an annual rate of 2.6%, driven primarily by electrification initiatives and the expansion of data centers. In contrast, production growth is lagging at only about 0.9% per year. This structural gap has been exacerbated by operational disruptions at major mines in Chile and Indonesia, including a strike at the Mantoverde operation and accidents at other key sites.

Price Momentum and Inventory Dynamics

These fundamentals have ignited fierce momentum in the copper market. Three-month futures contracts on the London Metal Exchange (LME) recently surged by roughly 4.3%, decisively breaking through the $13,000-per-ton barrier for the first time. During Tuesday's session, prices hit an intraday peak of $13,387 per ton. A contributing factor has been the rerouting of metal shipments into U.S. warehouses by traders seeking to avoid potential import tariffs. This logistical shift has further drained the already thin global inventory buffer, applying additional upward pressure on prices.

Should investors sell immediately? Or is it worth buying Southern Copper?

Expansion Strategy and Market Valuation

Southern Copper is responding to the supply crunch with an ambitious growth plan. The company is targeting copper production of 958,800 tons for 2025. Its medium-term roadmap aims to boost output to 1.08 million tons by 2030 and 1.53 million tons by 2034. To achieve these goals, a substantial $15 billion capital investment program has been outlined, with $10.3 billion earmarked for projects in Peru, including the Tia Maria and Michiquillay developments.

Market sentiment reflects high confidence in this outlook. The stock's 45.2% advance over the past six months and a notably bullish investor stance—with approximately 92% of market participants holding positive positions—signal expectations for sustained high commodity prices. The equity currently trades at a price-to-earnings (P/E) ratio of around 31.6.

Forward-Looking Scenarios

The path forward appears to hinge on two divergent scenarios. If Southern Copper and its peers successfully execute their planned production expansions, the additional supply could gradually alleviate market tightness over the medium term. Conversely, should production interruptions persist or the inventory shift to the United States continue, the supply deficit is likely to keep a firm floor under copper prices. This environment would, in turn, continue to support the elevated valuation of producers like Southern Copper.