SQM Boosted by Higher Prices for Lithium, Potash

Sociedad Quimica y Minera de Chile SA (SQM) of Santiago, Chile has reported third quarter net income of US$106.1 million on revenues of US$661.6 million up from US$1.7 million on revenues of US$452.9 million in the corresponding quarter of 2020. The revenue increase reflects higher sales in all of the company’s businesses led by Lithium and Lithium Derivatives.

For the first nine months of 2021, SQM generated a net income of US$263.9 million on revenues of US$1.78 billion up from US$97.5 million on revenues of US$1.30 billion in the first nine months of 2020.

Ricardo Ramos, SQM’s CEO, stated, “We reported a significantly higher net income for the nine months ended September 30, 2021 when compared to the similar period of 2020. These results were primarily driven by much higher sales volumes in lithium, iodine, specialty plant nutrition and potassium business lines as well as higher realized prices in all our business lines.

“The expansion of our lithium operations is yielding positive results, letting us increase our sales volumes more than 80% when compared to last year. We are already producing at a rate higher than 120,000 tonnes, while we continue working to reach 180,000 tonnes/year capacity next year. We are confident that our sales volumes could reach close to 100,000 tonnes this year, on a market that we estimate will grow close to 50%. This market growth is putting pressure on prices, as a result, we forecast average prices to be close to 50% higher in the fourth quarter this year when compared to prices reported in the third quarter 2021.”

“Given the existing shortage of potash and potassium-based fertilizers, we have seen a significant increase of global potassium prices, letting us report an over 65% increase of our average price in potassium business lines during the third quarter of 2021 when compared to the same period last year. This positive trend should continue during the fourth quarter, with prices of potassium-based fertilizers growing at a rate higher than earlier anticipated.”

SQM’s Lithium and Derivatives segment reported third quarter revenues of US$185.2 million, up from US$95.3 million in the same period of 2020. Lithium and derivatives sales volume for the period grew 24% to 22,000 tonnes. Total sales volume for the first nine months of 2021 reached over 70,000 tonnes, an over 80% increase when compared with the same period of last year. The company notes that lithium prices increased significantly throughout the year. Its average price in the third quarter was over 50% higher than the price seen in the same period last year.

SQM’s Specialty Plant Nutrition segment third quarter revenues were US$229.2 million versus US$174.8 million in the same quarter of 2020. Sales volumes increased by 8% to 292,800 tonnes. A significant increase in potash and ammonia prices resulted in higher average prices of potassium nitrate with the company’s average prices increasing over 20% in the third quarter. Given the current market conditions, SQM anticipates that its average potassium nitrate prices will continue to increase in the coming quarters, reaching over US$1,000/tonne.

SQM’s Iodine and Derivatives segment revenues in the third quarter increased by 47% to US$108.6 million. Sales volumes increased from 2,200 tonnes in 2020 to 3,100 tonnes in the latest quarter. Average prices remained stable over the past few quarters, but given the limited supply the company expects prices to increase in the fourth quarter.

SQM’s Potassium Chloride and Potassium Sulfate segment generated third quarter revenues of US$88.7 million versus US$65.5 million in the same period of 2020. The segment‘s sales volume in the quarter were 18% lower at 201,800 tonnes. The company notes that its average prices for the quarter reached almost US$440/tonne, an increase of over 66% the same period of 2020.

SQM’s Industrial Chemicals segment (nitrates, potassium chloride, boric acid, magnesium chloride) registered third quarter revenues of US$40.5 million, an increase of 20% from the same period of 2020. Volume sales of industrial nitrates increased by 5% to 49,600 tonnes.

Volume 35, Issue 22

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