SQM cut at Jefferies on downside risk for lithium prices; Southern Copper kept at Buy

[Lithium abstract concept]
Olemedia/E+ via Getty Images

Sociedad Quimera y Minera de Chile (NYSE:SQM [https://seekingalpha.com/symbol/SQM]) +0.6% in Monday's trading despite receiving a downgrade to Hold from Buy with a $50 price target, trimmed from $53, at Jefferies, seeing downside risk for lithium prices.

Recent supply curtailments should put a higher lithium price floor than previously expected, but Jefferies analysts led by Christopher LaFemina said they see the potential restart of Chinese projects skewing near-term lithium price risk to the downside over the near-term, with a more gradual recovery towards the long-term incentive lithium prices - US$15,000/ton by 2030 from 2028 previously - required for new projects.

While continuing to like SQM's (NYSE:SQM [https://seekingalpha.com/symbol/SQM]) low cost lithium assets and the resilience of its non-lithium business, particularly the iodine division, Jefferies sees the stock having a more balanced risk/reward from current levels.

Jefferies also maintained its Buy call on Southern Copper (NYSE:SCCO [https://seekingalpha.com/symbol/SCCO]) while hiking its PT to $155 from $130 to reflect a tightening copper market, and it sees the miner's low cash costs as a key differentiator which gives it material operational leverage to copper prices, but it downgraded parent Grupo Mexico (OTCPK:GMBXF [https://seekingalpha.com/symbol/GMBXF]) to Hold from Buy due to concerns around its Banamex offer.

MORE ON SQM AND SOUTHERN COPPER

* Sociedad Quimica y Minera De Chile: A Cyclical Play On Lithium With Long-Term Upside [https://seekingalpha.com/article/4815940-sociedad-quimica-y-minera-de-chilecyclical-play-lithium-with-long-term-upside]
* Sociedad Química y Minera de Chile Q2 2025 Earnings Call Presentation [https://seekingalpha.com/article/4815442-sociedad-quimica-y-minera-de-chile-s-a-2025-q2-results-earnings-call-presentation]
* Southern Copper: Low Costs And Strong Projects, But Priced For Perfection [https://seekingalpha.com/article/4825983-southern-copper-low-costs-and-strong-projects-but-priced-for-perfection]