 |
| SQM Lithium Prices |
SQM raises sales guidance and output targets as lithium prices show signs of recovery in China.
SQM, the world’s most valuable lithium producer, reaffirmed its long-term growth strategy despite a 28% drop in Q2 core earnings. The company raised its 2025 lithium supply expansion target and expects higher sales volumes amid early signs of price recovery. Spot lithium prices in China rebounded slightly after recent output cuts, offering cautious optimism.
Price Recovery Encourages Output Growth
SQM’s Q2 core EBITDA fell to $307.9 million, reflecting weak spot pricing and lower sales. However, the company maintained its full-year demand growth forecast of 17%. As a result, SQM now expects a 10% increase in Chilean sales volumes and raised its Australian guidance to 20,000 tons of lithium carbonate equivalent.
Meanwhile, Chinese supply curtailments have lifted domestic prices, supporting SQM’s Q3 pricing outlook. The recent closure of a Chinese mine operated by CATL further fueled a rally in lithium producer shares, including SQM. The company anticipates higher Q3 realized prices than in Q2.
Long-Term Investment Signals Market Commitment
In contrast to peers reducing output, SQM has adopted a volumes-over-value strategy. The firm allocated $750 million in 2025 capex to increase Chilean capacity to 240,000 tons of lithium carbonate by 2026 and 100,000 tons of lithium hydroxide by 2025. Additionally, its Australian Kwinana joint venture began commercial production in July and aims for 50,000 tons of hydroxide nameplate capacity by end-2026.
Total Q2 revenue fell 19% to around $1 billion. Some existing contracts hit their floor-price clauses, limiting volumes. However, SQM’s long-term investment points to sustained confidence in the structural demand for battery-grade lithium.
ScrapInsight Commentary
SQM’s continued expansion amid low prices reflects confidence in the long-term EV and energy storage market. Short-term oversupply pressures remain, but China’s cutbacks suggest a potential price floor. For recyclers, stable demand from high-volume producers could drive secondary lithium recovery growth.
