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SQM 2Q Hurt by Lithium Pricing — Commodity Comment

By Josh Beckerman

 

Chile-based lithium producer Sociedad Quimica y Minera de Chile SA, or SQM, said late Wednesday that second-quarter earnings fell to $70.2 million from $133.9 million, as revenue declined nearly 23% to $494.1 million. On Thursday, JPMorgan downgraded the company and shares fell nearly 7% to $23.71.

 

On lithium prices and 2Q results:

 

"The second-quarter results were mainly impacted by lower lithium sale prices, partly compensated by higher lithium sales volumes, lower potassium chloride volumes, and the lack of solar salt sales during the second quarter."

The company has "seen lithium supply growing more than demand over the past few quarters, putting pressure on prices. 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% to 40% increase in sales volumes next year, which will help us recover some of the market share lost in previous years."

 

On potassium chloride:

 

"We are expecting higher sales volumes in the potassium chloride business line this year than previously anticipated, reaching close to 600,000 metric tons, this implies significantly higher sales volumes during the second half of the year. Additionally, our sales volumes could grow in the future as we get back to the brine extraction levels that we had at the beginning of last year. We still expect the solar salt sales volumes this year of between 45,000 and 50,000 metric tons, while for the upcoming years these volumes should grow significantly as we will be supplying a major project in the Middle East that will require approximately 400,000 metric tons of product between 2020 and 2022."

 

On iodine:

 

"The margins in the iodine business line are becoming more attractive as prices are up almost 20% when compared to last year. We expect prices to continue on this upward trend as the market remains tight."

 

Write to Josh Beckerman at josh.beckerman@wsj.com

 

(END) Dow Jones Newswires

August 22, 2019 19:09 ET (23:09 GMT)

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