Sociedad Química y Minera de Chile S.A. (SQM), the world’s largest lithium producer by market value, reported a significant decline in second-quarter earnings but reaffirmed its commitment to expanding production capacity amid signs of a modest recovery in lithium prices.

Felipe Smith, senior commercial vice president of lithium, told analysts Wednesday: “We expect that with the recent price recovery in China, our sales price in Q3 should be higher than in Q2.”

“Some of the contracts we had in place, hit the lower limits set in those contracts, affecting the volumes agreed,” chief executive officer Ricardo Ramos said in the statement. 

In a financial update released Wednesday, the Santiago-based firm said its core earnings attributable to shareholders, before items, dropped 28% year-on-year to $307.9 million in the quarter ending June 30. Total revenues also fell 19% to approximately $1 billion, reflecting lower sales volumes and persistently weak spot prices in the lithium market. Despite the downturn, SQM raised its full-year sales volume guidance, pointing to improving demand conditions and recent price movements driven by output cuts in China. The company said it expects a 10% increase in sales volumes from its Chilean operations in 2025 and boosted expectations for its international division, projecting sales of about 20,000 tons of lithium carbonate equivalent.

Chinese Output Cuts Fuel Price Uptick

Lithium prices have been under sustained pressure for over a year, dragged down by a global supply glut stemming from increased production capacity and slower-than-expected demand growth. Prices remain more than 80% below their peak levels.

However, recent cutbacks in China — including the temporary closure of a major lithium mine operated by battery manufacturer Contemporary Amperex Technology Co. Ltd. (CATL) — have triggered a partial rebound. The Chinese mine is expected to be offline for at least three months, a development that has contributed to a price rally among global lithium producers.

Speaking to analysts, Felipe Smith, SQM’s Senior Commercial Vice President of Lithium, noted that prices in China have picked up pace in recent weeks. He added that the company anticipates at least a 10% increase in lithium sales volumes during the current quarter compared to April–June.

Continued Capital Investment and Expansion Plans

SQM is pressing forward with its long-term strategy focused on expanding production capacity rather than curtailing output in response to market weakness — a contrast to higher-cost producers that have opted to scale back operations.

The company reaffirmed its capital expenditure budget of $750 million for 2025. These funds are aimed at increasing annual lithium carbonate capacity in Chile to 240,000 tons by 2026 and lithium hydroxide capacity to 100,000 tons by the end of 2025.

In addition, SQM announced that its Kwinana refinery joint venture in Australia achieved first commercial production in July. The facility is projected to reach a nameplate capacity of 50,000 tons of lithium hydroxide annually by the end of 2026, with half of that output allocated to SQM.

The lithium sector continues to navigate a challenging environment marked by oversupply and price volatility. Several producers have responded by curbing output, delaying projects, or adjusting business models. In contrast, SQM’s approach suggests confidence in the medium-term fundamentals of the lithium market, including expectations for accelerating demand tied to the global energy transition.

While the company did not specify the absolute volume behind the projected 10% increase from its Chilean facilities, it emphasized that both domestic and international operations are expected to contribute to higher total sales volumes in the coming quarters.

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