The Chilean company reported a sales volume decline of 27 percent as a result of delays in a project to ramp-up lithium output.
On top of the supply issues, a 25-percent growth in demand in 2018 supported higher prices. According to the company’s earning statement, prices have averaged $16,5000 per tonne year-to-date, up from $13,500 in 2017.
“The price that we have seen is a result of very strong demand, stronger than we originally anticipated, and also there has been a delay in some of the production promises,” CEO Patricio de Solminihac said in a conference call where he announced that the company’s profits fell in the third quarter.
“It is expected that prices will remain at these levels for the remainder of the year,” he added.
Looking ahead, Solminihac said SQM is working with its customers for the closure of contracts for 2019, and added “we don’t know yet what the direction of prices will be next year.”
In October, the Chilean company announced delays in upgrading its lithium carbonate plant, which processes lithium from Salar de Atacama.
“We are working diligently to resolve these issues as soon as possible,” Solminihac said. “The ramp-up delay will likely impact our fourth-quarter lithium and derivative sales volumes, delaying part of these volumes to the first quarter of 2019.”
He added that total lithium sales volumes this year were expected to be around 45,000 tonnes. That’s down from the company’s 55,000 tonnes forecast at the start of the year.
According to Solminihac, SQM will still reach targeted capacity of 70,000 tons per year in the near term, but the CEO did not confirm any specific time frame.
On Thursday (November 22), shares of SQM closed up 2.51 percent in New York, trading at US$42.95. The company’s share price is down more than 30 percent year-to-date.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.