Lithium Business Only Bright Spot for SQM

sqm-logoSociedad Quimica y Minera de Chile SA (SQM) of Santiago, Chile has reported a net income of US$213.2 million on revenues of US$1.73 billion for 2015 compared with income of US$296.4 million on revenues of US$2.01 billion in 2014. The decrease in revenues reflects lower sales in all of the company’’s segments with the exception of Lithium and Lithium Derivatives where sales were higher.

Patricio de Solminihac, SQM’’s CEO, said, ““During 2015, we faced many challenges, including lower prices and lower volumes impacting some of our business lines. As mentioned previously, our sales volumes in both the specialty plant nutrition and potassium segments were lower as a result of delays during the first half of 2015. We were not able to fully compensate for those delays during the second half of the year. In addition, prices have fallen significantly in the past twelve months in the potassium chloride and iodine markets. In the lithium business line, however, average prices rose over 10% compared to 2014, partially offsetting lower iodine and potassium chloride prices.””

SQM’’s Specialty Plant Nutrition segment generated revenues of US$651.2 million versus US$708.0 million in 2014. The decrease reflects lower sales volumes in potassium nitrate and sodium potassium nitrate and in specialty blends partially offset by a 65% increase in volume sales of sodium nitrate and a 5% increase in sales of other specialty plant nutrients. Average prices in the segment were slightly lower at US$784/tonne.

SQM’’s Iodine and Derivatives segment generated revenues of US$262.6 million in 2015 compared with US$335.4 million in 2014. The segment’s sales volumes were 6% higher, at 9,300 tonnes and average sales prices were 26% lower. Prices are expected to remain an area of concern, and the company expects further price deterioration in 2016; prices today are around US$25/kg.

SQM’’s Lithium and Derivatives segment generated revenues of US$223.0 million in 2015 up from US$206.8 million in 2014. The increase reflects a 2% decrease in sales volume, to 38,700 tonnes, that was more than offset by a 10% increase in average sales price. In the near term, SQM expects this pricing trend to continue and sales volumes to increase. In 2015, batteries accounted for almost 50% of the total lithium market, including electric cars.

SQM’’s Potassium Chloride and Potassium Sulfate segment generated 2015 revenues of US$430.2 million down from US$584.3 million in 2014. Sales volumes were 20% lower at 1.24 million tonnes and average prices decreased 7.7%. SQM’’s average price in this business line was US$346/tonne. And the company expects average prices in 2016 to be lower than in 2015.

SQM’’s Industrial Chemicals segment registered a 5% decrease in 2015 sales revenues to US$97.1 million. Solar salt sales volumes for the year reached just over 37,000 tonnes, an increase of 65% from 2014. Prospects in the solar salt market remain positive and the company expects to sell over 70,000 tonnes in 2016.

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