SQM Expects Higher Lithium Volume to Offset Lower Prices

Sociedad Quimica y Minera de Chile SA (SQM) of Santiago, Chile has reported a first half net income of US$95.8 million on revenues of US$850.5 million compared with US$150.7 million on revenues of US$998.4 billion in the first half of 2019. The revenue decrease reflects significantly lower sales in the company’s Lithium and Lithium derivatives business.

Ricardo Ramos, SQM’s CEO, stated, “Although the downward lithium pricing trend continued during the second quarter, I would like to highlight that lithium sales volumes exceeded 12,600 tonnes, almost 50% higher than sales volumes reported in the first quarter of the year, in line with our goal of selling higher lithium sales volumes this year, when compared with last year, thus increasing our market share. In the iodine market, prices were stable, and hovered around US$35/kg, and the business line contributed approximately 39% to our overall gross profit.”

SQM’s Lithium and Lithium Derivatives segment’s first half revenues were US$151.2 million, down 48% from US$293.6 million in the prior year period. The segment’s sales volumes in the latest period were 1.6% lower at 21,200 tonnes. The company notes that average lithium prices in the first half were approximately 45% lower than the average prices during the first half of 2019. And that, given the uncertainty surrounding the lithium market in the short-term, it is impossible to confidently guage when prices may begin to recover. Although SQM believes that prices will be lower during the second half of the year, but sales volumes should be higher.

SQM is continuing work on a lithium carbonate expansion and an expansion of its lithium hydroxide capacity. Both projects are in Chile and scheduled for completion by the end of 2021.

SQM’s Specialty Plant Nutrition segment generated first half 2020 revenues of US$347.8 million, down from the US$383.8 million recorded in the first half of 2019. Sales volumes decreased 6% to 501,200 tonnes, reflecting declines in sodium nitrate, potassium nitrate and sodium potassium nitrate sales volumes. Average prices in this segment dropped just over 3% during the second quarter of 2020.

SQM’s Iodine and derivatives segment generated first half 2020 revenues of US$188.6 million compared with US$186.1 million in the first half of 2019. The segment’s sales volumes decreased 19% to 5,400 tonnes over the first half of 2019. The higher iodine revenues were the result of higher prices during the first six months of 2020, when average prices reached about US$35/kg. The company expects that iodine volumes will be lower during the second half, especially in the x-ray contrast media segment.

SQM’s Potassium Chloride and Potassium Sulfate segment generated first half revenues of US$77.5 million, 12.5% lower than in the first half of 2019. Sales volumes in the segment were 3% lower at 234,600 tonnes. SQM notes that average prices in this business line were under 4% lower than prices reported during the first quarter of 2020. SQM believe that there will be some price volatility in this market in the second half.

SQM’s Industrial Chemicals segment recorded first half 2020 revenues of US$73.7 million, a 139% increase from the prior year period. Volumes increased 143% to 94,500 tonnes. The company attributes the increase in volume sales to higher solar salt sales. The company expects to sell approximately 150,000 tonnes of solar salts in 2020.

Volume 34, Issue 16

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