Lithium Giant SQM Faces Market Reality: Q3 Profits Drop 73% Despite Record Production

The global lithium market’s volatility has significantly impacted Chile’s SQM, the world’s second-largest lithium producer. The company’s third-quarter results reveal the stark reality of current market conditions.

SQM posted a net profit of $131.4 million in Q3 2024, marking a dramatic 73% decrease from the $479.4 million earned in the same period last year. Total revenue fell to $1.07 billion, representing a 41% year-over-year decline.

The company achieved record production levels of 52,000 tonnes of lithium carbonate in Q2 2024. Sales volumes grew by 18% compared to the previous year, demonstrating strong market demand.

However, average lithium prices plummeted 67% year-over-year. The price per tonne dropped to $12,700 in Q2 2024, compared to $34,000 in the same period of 2023.

SQM maintains its competitive edge through its operations in Chile’s Atacama salt flat, which offers some of the world’s highest lithium concentrations.

The company expects to produce 210,000 tonnes annually, representing nearly one-fifth of global lithium production. The global lithium market continues to expand.

Lithium Demand Growth and SQM’s Strategic Adaptation

Demand is expected to grow by 20% in 2024, exceeding 1.1 million metric tonnes. Electric vehicle sales, particularly in China, drive this growth, with projections showing a 22% increase to 17.3 million units.

The price decline has reduced SQM‘s payments to Chile’s government agency CORFO by approximately 80% compared to the previous year. This reduction represents a significant decrease in government revenue from lithium operations.

Despite current market challenges, SQM maintains its production targets of 190,000 to 195,000 metric tons for 2024. The company expects continued pricing pressure in the fourth quarter but remains committed to its long-term growth strategy.

The company’s diversification into other products, including specialty plant nutrition and iodine, helps offset some impact from declining lithium prices. These segments have shown positive growth, with specialty plant nutrition volumes increasing by over 20%.