What's Happening?
Chilean lithium producer SQM anticipates a rise in lithium prices and sales volumes in the third quarter, following a significant drop in second-quarter profits. The company reported a 59% decline in quarterly profit due to lower lithium prices, which have fallen by nearly 90% since late 2022. SQM expects a 10% increase in sales volumes and sees potential supply reductions in China as a positive indicator for price recovery. The company is also progressing towards a partnership with Chilean state-run copper miner Codelco, pending regulatory approval.
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Why It's Important?
Lithium is a critical component in electric vehicle batteries, and its price fluctuations have significant implications for the global EV market and related industries. SQM's forecasted price increase could stabilize the market and encourage investment in lithium production. The partnership with Codelco may enhance SQM's production capabilities, impacting the supply chain and potentially leading to more competitive pricing. These developments are crucial for stakeholders in the EV industry and could influence future market dynamics.
What's Next?
SQM plans to finalize its partnership with Codelco by September or October, pending regulatory approval from China. The company is also preparing to submit an environmental impact report for a major revamp of its lithium operations, expected to be approved by 2030. These steps indicate SQM's strategic efforts to strengthen its position in the lithium market and address environmental concerns.
