Soquimich Rises to Two-Year High as Santander Raises to `Buy' From `Hold'

Soc. Quimica y Minera de Chile SA climbed to the highest level in two years after Banco Santander SA raised it to “buy” on better-than-estimated growth in iodine and lithium volume and higher potash prices.

Chile’s largest fertilizer maker, known as Soquimich, rose 3 percent to 22,450 pesos in Santiago trading, the highest price since July 1, 2008.

Soquimich was increased from “hold” by Santander analyst Francisco Errandonea, who forecast its American depositary receipts will reach $52 next year, compared with an estimate of $41.70 for 2010. The ADRs rose to $45.14 today. The company yesterday reported second-quarter profit of $105 million, beating the $84.9 million average estimate of three analysts surveyed by Bloomberg.

“We are incorporating the better-than-expected 2Q10 results, reflected in the higher potassium nitrate prices coupled with a strong recovery in iodine and lithium volume,” Errandonea said. “In addition, we are adding a $10 per ton increase expected in potassium prices in 4Q10, and a $40 per ton rise for 2011.”

Soquimich is producing potash and lithium at three-quarters of its total capacity after a “full recovery” in demand this year, Chief Executive Officer Patricio Contesse said in a conference call with analysts today.

To contact the reporter on this story: James Attwood in Santiago at Jattwood3@bloomberg.net Matthew Craze at mcraze@bloomberg.net

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