Introduction Table of Contents:

1. SQM quarterly revenue decline situation

2. Analysis of Reasons for Profit Decline

3. Future prospects of SQM

4. Overall situation of the industry

5. Edit viewpoint

1、 SQM quarterly profit decline

On August 21, 2024, SQM Chile, the world's second-largest lithium producer, announced a quarterly decline in earnings that exceeded expectations, reaching 63.2%. The main reason is the weak price of lithium metal in batteries, and the company expects this situation to continue for the rest of this year.

2、 Analysis of Reasons for Profit Decline

SQM also produces fertilizers and industrial chemicals. According to data from the London Stock Exchange Group (LSEG), the company's net profit for the second quarter was $213.6 million, or 75 cents per share, lower than analysts' expectations of $296.7 million (or 95 cents per share). The revenue of $1.3 billion for the quarter was in line with analysts' expectations.

SQM produces this white metal in the Atacama Salt Flats in northern Chile, which has the highest lithium concentration in brine in the world, giving it the advantage of low-cost production. However, despite lithium's quarterly sales reaching a historic high, its performance has been dragged down by a significant drop in metal prices. CEO Ricardo Ramos stated that this trend will continue.

3、 Future prospects of SQM

Ramos said, "We expect this pricing trend to continue in the second half of this year. Currently, China's lithium price index is nearly 20% lower than the average lithium price index in the second quarter of 2024

According to a package of lithium prices tracked by benchmark mining intelligence, lithium prices have fallen by about 70% in the past year due to lower than expected global demand for electric vehicles, partly due to high borrowing costs and global uncertainty.

Ramos said that some lithium producers may reduce production because low prices make the project economically unfeasible. SQM has stated that it will continue its expansion plan, although it is re evaluating specific markets and initiatives that may be "less attractive in the short term" in the current situation.

4、 Overall situation of the industry

US competitor Albemarle also operates in Atacama and announced last month that it will cut costs after reporting a second quarter loss.

Editor's viewpoint:

The significant decline in SQM profits reflects the current difficulties faced by the lithium market. Although lithium plays an important role in fields such as electric vehicles, the price weakness is mainly due to factors such as lower than expected global demand, high borrowing costs, and global uncertainty. In this situation, some producers may reduce production, while SQM continues to expand its plans while reassessing the market, demonstrating the industry's cautious attitude in an uncertain environment. In the future, the trend of the lithium market will depend on various factors such as the global economic situation, demand for electric vehicles, and the decisions of manufacturers.