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SQM Chile posts a surge in profit for the quarter as the lithium market tightens

SQM, a lithium producer in Chile, reported on Tuesday an?improvement of its first-quarter revenue and profit. This was due to higher prices and increased sales volumes due to the robust demand for electric car?batteries as well as energy storage.

The 'world's 2nd largest lithium producer, LSEG, said?net profit more than doubled from $365 million to $365 in the January-March quarter but fell short of an estimated $426 million by analysts polled.

The adjusted EBITDA grew by more than two-fold to $837 millions, exceeding the LSEG estimate.

SQM's revenue from its biggest unit, the lithium and derivatives division, has risen to $1.19billion, thanks to a rise in prices and an increase of 25% in sales volumes.

CEO Ricardo Ramos stated that the company sold 69,000 metric tonnes of lithium carbonate (LCE) equivalent during the quarter, as it was able to meet the high demand from customers.

SQM reported that its "average realized lithium price" rose 95% from the previous year to approximately $17.8 per kg. This reflects a tight turnaround in the market after a decline from record highs reached in 2022.

The price of battery metal was under pressure due to the fact that supply growth exceeded demand. This hurt margins for global manufacturers including SQM, and its U.S. rival Albemarle.

The rapid growth of battery energy storage systems and the continued adoption of electric vehicles has helped to support demand.

SQM, reflecting this improvement, said that it now expects its total sales volumes of lithium to grow by about 15% in 2026. This is up from an earlier?forecast? of 10%. It also estimated the global demand for lithium could be over 1.9 million tons of LCE.

SQM also highlighted its progress in partnership with Chilean State Miner?Codelco through their Nova Andino Litio project, which aims at expanding lithium production on the Atacama Salt Flats.

Ramos stated that the partners are finalizing documents to begin environmental permits for the Salar Futuro project within the next few months.

SQM is one of two companies in Chile that produce lithium. It also produces specialty plant nutrients, industrial chemicals, and iodine. (Reporting and editing by Daina Beth Solon and Clarence Fernandez; Kylie Madry is the reporter.

(source: Reuters)