Chile’s SQM, the world’s second-largest lithium producer, released first-quarter earnings that missed analyst forecasts on Wednesday.
SQM posted a $137.5 million net profit, or 48 cents a share, falling short of the consensus estimate of a net profit of $171.2 million, or 63 cents a share, based on LSEG data.
The global lithium market is facing significant challenges, including a slowdown in global EV sales and oversupply from Chinese imports.
Lithium prices have fallen by almost 90% from their late 2022 peak in the face of oversaturation, weighing on profits across the sector.
While SQM missed on profit, the company did hit $1.04 billion in quarterly revenue for the January–March quarter, a number that fell into line with analyst estimates of $1.045 billion.
Falling lithium prices put pressure on profit margins
SQM’s poor result comes as the lithium industry faces one of its most difficult periods.
The company, which also manufactures fertilisers and industrial chemicals, has been hit by the dramatic reduction in lithium prices that began in 2023 and continued through 2025.
The Chilean miner had already warned of a hard pricing environment, having already reported decreased profitability in the fourth quarter of 2024.
At the time, SQM predicted that lithium prices would continue to plummet until early 2025.
That prediction has largely come true, with the oversupply problem showing little signs of abating.
On Wednesday, SQM reiterated these concerns, indicating that realised lithium prices in the second quarter will be lower than those in the first quarter.
Strategic moves in the Atacama
As pricing pressures increase, SQM is seeking to solidify its long-term position via partnership opportunities.
The firm is pending the last regulatory approval to wrap up a big alliance arrangement with Chile’s state-owned copper miner, Codelco.
This joint venture centres on the world’s richest deposits of lithium brine located in the Atacama salt flat.
The joint venture represents a defining step for SQM to strengthen its domestic position and secure future production volumes in a rapidly consolidating and politically charged global lithium market.
Managing quality assets, such as those in the Atacama, could serve a longer-term advantage.
A sector searching for balance
The lithium boom, once seen as the key to a sustainable energy transition, may now face the challenges of rapid expansion.
Rising demand for lithium, combined with China’s current supply and developments in Australia, Latin America, and Africa, is reshaping global market dynamics.
The key concern for SQM and its peers is how long the glut will endure.
Prices are expected to remain low, though the demand for EVs, energy storage solutions, and electrification programs increases.
Meanwhile, lithium producers are being driven to adjust.
SQM involves balancing near-term margin compression with long-term investments in partnerships and assets to generate profits over time.
Its financial performance over the next few quarters may be under pressure, but its strategic position on a lithium-rich landscape is a major long-term asset.
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