One Sentence Summary:

The world's second-largest lithium producer, SQM, flagged potential further price declines due to an excess of inventory in Asia and increased supply - but maintained its forecast for a 20% increase in global lithium demand this year.

Companies:

• SQM (Sociedad Química y Minera de Chile)

• Albemarle

• Codelco

• Adionics

What's Happening:

• SQM reported a larger-than-expected drop in third-quarter earnings, putting it down to an excess of lithium inventory, particularly in Asia, and  new supply.

• Despite the price pullback, SQM is charging ahead and plans to maintain full production capacity to build inventory for potential future rebounds in purchasing.

• The company’s outlook for prices is negative for the rest of the year

• SQM is continuing  talks with Chile’s state-owned miner, Codelco, over a new operating arrangement under Chile’s public-private participation model, focusing on new production methodologies, including direct lithium extraction (DLE).

Numbers + Facts:

• SQM maintains its forecast for a 20% increase in global demand for lithium this year and remains optimistic about electric vehicle sales in the energy transition.

• Despite the challenging market conditions, SQM's lithium carbonate capacity has reached 200,000 tonnes a year, with plans to expand to 210,000 tonnes by early 2024.

• Shares of SQM fell by as much as 8.7% in New York overnight

Looking Ahead:

• Lithium demand is expected to rise dramatically over the next decade 

• Short-term shocks are not uncommon for lithium market participants, as the world grapples with its decarbonisation goals - this trend could continue for many years to come

Read more: SQM sees lithium glut pushing down prices through year-end (Via AFR)