Chile's largest lithium producer, SQM, has reported a 24.7% year on year drop in lithium revenues to $138.5 million in the second quarter of 2019, from $183.9 million during the same period in 2018 on lower lithium prices achieved in China and market oversupply.
The lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery-grade spot price has meanwhile fallen by 18.75% to $12-14 per kg on a cif China, Japan and Korea basis, from $15-17 per kg on January 3.
SQM’s first-half lithium revenues were down by 15.7% year on year to $293.6 million, from $348.2 million in the first half of 2018.
SQM reported a 14% increase in lithium compound sales volumes in the three months to June, bringing total sales in the first half of 2019 to 22,800 tonnes, up slightly from 21,100 tonnes sold in the corresponding period of 2018.
The company anticipates to increase sales volumes by 5-10% in the second half of 2019.
“We have seen lithium supply growing more than demand over the past few quarters, putting pressure on prices,” SQM chief executive officer Ricardo Ramos said. “We sold higher sales volumes in the second quarter and expect to sell higher volumes in the second half of the year as we prepare for a 30-40% increase in sales volumes next year, which will help us recover some of the market share lost in previous years.”
SQM anticipates lower prices for the third quarter of 2019 due to increased sales volumes on short-term contracts into China where the market price is lower on different quality and grades of products offered in this market.
The average price achieved during the third quarter could fall to approximately $10,000 per tonne, down by 31.50% from $14,600 per tonne average price achieved during the first quarter of the year, SQM said.
Battery grade lithium prices have continued to fall in China on high inventories, as Fastmarkets reported in this week's global lithium wrap.
SQM has a production capacity of 70,000 tonnes per year of lithium carbonate and expects to sell 45,000-50,000 tonnes of lithium carbonate equivalent (LCE) in 2019 compared with 45,100 tonnes in 2018.
The company is working on expanding its lithium carbonate production capacity in Chile to 120,000 tpy, which it is set to achieve in the second half of 2021, and its lithium hydroxide production to 29,500 tpy by the end of 2021.
SQM’s total revenues were down by 13.7% to $998.4 million during the first half of the year, from $1,157.4 million achieved during the same period in 2018.
The company's total earnings in the first half of 2019 decreased by 39.1% to $150.7 million, from $247.7 million in the same period in 2018. Gross profit was also down by 30.95% to $288 million during the same period, from $417.1 million reached last year.