SQM Signals More Pain for Lithium Industry as Prices Drop

Bloomberg11-21 00:14

(Bloomberg) -- SQM, the world’s second-biggest lithium producer, is projecting further price declines of the battery metal as a painful rout continues to squeeze the industry.The Santiago-based firm ...

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SQM said Wednesday in its earnings statement that the market trend will continue, with fourth-quarter realized prices expected to be lower than the three months ended Sept. 30.Lithium is on track for a second year of price pullbacks amid a glut in the key ingredient in electric-vehicle batteries. While there’s been a mini-recovery in China in recent weeks, analysts have warned there’ll still be too much supply in 2025.“Although demand continues to grow at a strong pace, mainly driven by strong EV sales growth in China, we continue to see the prices pressured by a temporary oversupply,” Chief Executive Officer Ricardo Ramos said on a call with analysts.Still, low-cost supplier SQM has vowed to keep increasing output and sales volume, churning out close to 210,000 metric tons this year and 230,000 tons next year. The company retained its annual sales volume guidance of 190,000 tons to 195,000 tons and said it expects to increase sales next year in line with higher production.On Wednesday’s call, executives said market oversupply is temporary, with demand set to grow 16% to 18% annually over the next five years. American depository receipts of SQM rose as much as 1.8% in New York.Many of SQM’s rivals have curtailed output and slashed spending plans to defend margins. The market has struggled since a late-2022 peak, as new projects came on stream just as global EV adoption began to slow. There has been 190,000 tons of lithium mine capacity curtailments since late last year and another 50,000 tons of delayed projects, according to CRU Group. As a result, the consultancy cut its supply forecast by 14% for next year.SQM’s adjusted earnings before interest, taxes, depreciation and amortization fell by a steeper-than-expected 57% for the third quarter while revenues dropped 41% to $1.1 billion.(Adds CEO comment in fourth paragraph; shares in sixth paragraph.)©2024 Bloomberg L.P.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"Economic Data","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485125532"}