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Lithium price slump continues to impact SQM's profits in Q2 2023

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2023-08-18

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The decline in lithium prices, particularly in the crucial Chinese market during late 2022 and early 2023, continued to weigh on the performance of SQM, the Chilean-based second-largest global lithium group, trailing behind the US-based Albemarle.

SQM reported a 32.5% drop in net profit for the second quarter compared to the same period the previous year, primarily driven by diminished prices of the vital renewable battery material. The mining company posted a net profit of $580 million for the quarter ending in June, with a 21% decrease in revenue to $2.05 billion for the same period. Despite sales volumes for lithium and derivatives rising by 26% to 43,100 thousand tonnes year-over-year, average selling prices experienced an almost 37% decline.

"While significantly higher sales volumes during the second quarter of 2023 had a positive impact, it was partially offset by lower average selling prices compared to the same period last year," the company's statement noted. A similar trend persisted in the first half of 2023, as net income slipped to $1.33 billion from $1.655 billion in the prior year. The revenue for the first six months of this year totaled $4.315 billion, compared to $4.618 billion for the first half of 2022.

Meanwhile, the global leader, Albemarle, reported net sales of $2.4 billion for the June quarter, signifying a 60% increase. Net income also rose by 60% to $650 million.

Over the six months ending in June, Albemarle's sales surged to $4.95 billion, marking a significant jump from the $2.6 billion recorded during the same period in 2022. Net income for the first half of this year reached $1.95 billion, nearly three times the $722 million reported during the corresponding period the previous year.

The forthcoming release of annual results from Australian companies Mineral Resources, IGO, and Pilbara Minerals is anticipated to provide a comprehensive understanding of how the price downturn impacted the global lithium majors in 2023. These results are expected to be disclosed by the end of August.

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