Chile's SQM quarterly profit rises as lithium prices rebound

SQM posted stronger third-quarter results as net income rose to $178.4 million ($0.62/share) from $131.4 million a year earlier and revenue increased 8.9% to $1.17 billion, with lithium and derivatives revenue up 21.4% to $603.7 million as average lithium prices improved for the first time in two years amid stronger-than-expected demand. CEO Ricardo Ramos said the upward trend should continue into Q4 driven by electric-vehicle and energy-storage demand, even as the market previously softened after 2022 record prices when supply growth outpaced demand. The company is also close to finalizing a high-profile partnership with state miner Codelco to boost extraction in the Atacama salt flat — cleared by China’s markets regulator but awaiting Chile’s comptroller approval — a move that could materially affect SQM’s capacity and regional supply dynamics.

Analysis

SQM reported Q3 net income of $178.4 million ($0.62/share) versus $131.4 million a year earlier, with revenue rising 8.9% to $1.17 billion and lithium and derivatives revenue up 21.4% to $603.7 million for the quarter ended Sept. 30, driven by stronger-than-expected demand and an improvement in average lithium prices for the first time in two years. Management noted expectation that the upward price trend will continue into Q4 supported by EV and energy-storage systems (ESS) demand, signalling demand-side momentum beyond cyclical restocking.

The backdrop remains mixed: prices cooled after 2022 as supply growth outpaced demand and pressured margins for SQM and peers such as Albemarle, so recent price recovery is positive but not yet a structural reversal. Reported results show SQM benefiting from recovering pricing and volume dynamics this quarter, but margin sustainability will hinge on how quickly demand growth outpaces new capacity.

Strategically, SQM is close to finalising a partnership with state miner Codelco to expand Atacama output; China’s regulator cleared the deal but it still awaits Chile’s comptroller approval, which could arrive by year-end and materially change regional supply dynamics and long-term capacity. Near-term investor outcomes therefore depend on Q4 price/volume trends and the timing and terms of the Codelco agreement, presenting both upside and regulatory/overcapacity risk.

Key Decisions for Investors

• Consider selective long exposure to SQM to capture improving pricing and Q3 upside, but size positions conservatively until Q4 pricing momentum and sales volumes confirm the trend
• Monitor Chile’s comptroller decision on the Codelco partnership closely and treat approval as a material event that could increase supply and pressure future prices, adjusting position sizing or hedges accordingly
• Track benchmark lithium price trends, quarterly lithium volumes and EV/ESS demand indicators and compare SQM’s margins versus peers such as Albemarle to reassess conviction within the next 1-2 quarters