Chile’s SQM, the world’s second-largest lithium producer, foresees a period of steady lithium prices in the next three months, alongside robust demand throughout the year, as highlighted by company executives during a call with analysts on Thursday.
The company’s fourth-quarter net profit witnessed a decline of over 80% from the previous year, reflecting the ongoing slide in prices for lithium, a crucial component in electric vehicle batteries.
The global lithium market experienced an oversupply situation in 2023, leading to price declines and prompting major producers like Albemarle to implement workforce reductions and halt expansion plans.
Despite an anticipated 20% increase in global demand for lithium in 2024 and an expected sales volume growth of 5%-10% for SQM, the company cautioned that the market surplus would likely maintain price stability.
SQM executives expressed optimism for the latter part of the year, foreseeing higher sales volumes and surpassing first-quarter figures compared to the previous year. They indicated no significant shifts in lithium pricing in the upcoming quarter.
Shares of SQM surged by 9.2% to $50.25 on Thursday, buoyed by rising lithium carbonate prices in China, which also contributed to a 4.7% increase in Albemarle’s shares to $138.20.
SQM’s Chief Executive Ricardo Ramos mentioned the potential for adjustments to the sales volume forecast as the year progresses, underscoring the company’s adaptability to market dynamics.
Discussions during the call also delved into the electric vehicle (EV) market, with SQM’s lithium market analyst Gonzalo Gil highlighting expectations of EVs constituting over half of new vehicle sales in the next decade, emphasizing the continued significance of lithium batteries.
While EV demand experienced a temporary slowdown recently, industry players are recalibrating strategies amidst shifting market conditions. Analysts are monitoring potential impacts on lithium oversupply should former President Donald Trump secure victory in the U.S. presidential election, with Gil expressing confidence in lithium market resilience against such shifts.