SQM Inc. posted third-quarter net income of $1.1 billion on revenues of $2.96 billion, up from the year-ago $106.1 million and $661.6 million, respectively. SQM beat the average analyst estimate, the Bloomberg Consensus, on both income and revenues, which were $973 million and $2.74 billion, respectively. Gross profit was $1.63 billion, up from $224.8 million, while adjusted EBITDA was $1.66 billion, up from $250.9 million.
Third-quarter lithium volumes were 41,600 mt, the highest ever reported for the company, and average prices reached record high levels of over $5,600/mt. SQM believes 2022 global demand will grow at least 40%, and that its own sales volumes this year will surpass 150,000 mt. At the same time, SQM said it believes new lithium supply outside of SQM has been delayed and that the supply balance will be tight for the remainder of the year and into 2023. SQM also announced that it has recently signed new, long-term lithium and iodine supply contracts.
SQM reported on Nov. 16 that its Board of Directors has just approved the first stages to expand lithium hydroxide capacity from 40,000 mt/y to 100,000 mt/y in Chile, requiring additional investment of $360 million to the previously announced capex plan. The new capacity should be in full operation by 2025. In September, SQM announced the purchase and development of a new plant in China that will allow it to produce up to 30,000 mt/y of lithium hydroxide in China using lithium sulfate coming from Chile. Also during the third quarter, the company announced its Salar Futuro project in Chile, which entails new technologies, increased yields, and use of sea water and investment of $1.5 billion, which the company said will allow it to be the most sustainable mining operation in the world.
Third-quarter Specialty Plant Nutrition (SPN) revenues were up 28%, to $292.5 million from the year-ago $229.2 million. Volumes sank 29%, to 207,900 mt from 292,800 mt. Potassium-based products were off 26%, to 108,500 mt from 147,000 mt, while specialty blends fell 39%, to 62,300 mt from 102,900 mt.
Due to historically high prices, as well as increases in other raw materials, SQM believes that global demand for agricultural potassium nitrate could decrease 15-20% this year compared to global demand in 2021. It said this decrease, combined with additional supply that has entered the market from China, will pressure SPN sales volumes for the year, a continuation of the trend that it saw during the first nine months of the year. It said 2022 sales volumes will be significantly below 2021’s 1.15 million mt.
Nine-month SPN revenues were up 40%, to $898.1 million from the year-ago $640.5 million. Volumes were off 25%, to 648,600 mt from the year-ago 869,500 mt. All major categories saw declines. Potassium-based products were off 23%, to 371,100 mt from 484,700 mt, while specialty blends dropped 31%, to 167,600 mt from 241.900 mt.
Third-quarter Potassium Chloride and Potassium Sulfate (MOP/SOP) revenues were down 32%, to $60.2 million from the year-ago $88.7 million, while volumes were off 69%, to 62,700 mt from 201,800 mt.
SQM said that as a result of high prices earlier in the year it has seen a downward pressure on global demand in the third quarter and believes demand will decrease significantly compared to 2021. It said in recent months, this decrease in demand has already begun to impact prices, and during the third quarter SQM said its average prices decreased approximately 3% compared to second-quarter prices.
SQM expects this downward trend to continue into the fourth quarter. It said third-quarter sales were affected by tougher market conditions, specifically in Brazil, which is one of its main markets. It believes sales volumes in the MOP/SOP business line will be approximately 500,000 mt in 2022, compared to 2021’s 893,000 mt.
Nine-month MOP/SOP revenues were up 71.5%, to $356.7 million from the year-ago $208 million, while volumes declined 35.1%, to 382,000 mt from 588,600 mt.
SQM’s nine-month net income was $2.76 billion on revenues of $7.58 billion, up from the year-ago $263.9 million and $1.78 billion, respectively. Gross profit was $4.09 billion, up from $547.3 million, while adjusted EBITDA was $4.17 billion, up from $626 million.