SQM shares rise as record lithium sales drive Q2 revenue to $2.47bn

Sociedad Química y Minera de Chile S.A. delivered a dramatic second-quarter earnings rebound as recovering lithium prices and record sales volumes pushed revenue up 136.7% year over year to $2.47 billion. Net income surged 646.4% to $660 million, or $2.31 per share, while gross profit increased nearly fivefold to $1.26 billion and adjusted EBITDA climbed to approximately $1.32 billion from $307.7 million. Lithium and derivatives generated $1.78 billion of quarterly revenue, almost four times the prior-year level, as total lithium sales reached a record 84,100 metric tons of lithium carbonate equivalent. SQM also raised its assessment of the 2026 global lithium market, saying demand should exceed 2.1 million metric tons as stronger energy-storage consumption offsets slower-than-expected growth in battery electric vehicles.

The magnitude of the recovery goes well beyond higher physical volumes. SQM’s average realized lithium price from its Nova Andino Litio operations reached approximately $21.80 per kilogram in Q2, almost 23% above the first quarter and close to 160% higher than a year earlier. That pricing rebound, combined with 59% year-over-year growth in lithium sales volume, transformed the economics of a business that had been under severe pressure during the previous lithium downturn.

Investors responded positively on August 19, with SQM’s New York-listed shares trading around $76.26, up approximately 2.4% from the previous close after reaching an intraday high of $77.44. The advance suggests investors are increasingly willing to price in a healthier lithium supply-demand balance, although SQM’s ambitious multibillion-dollar expansion program still depends on prices remaining sufficiently attractive to support long-term returns.

Record lithium volumes and sharply higher prices have transformed SQM’s earnings profile

Lithium and derivatives revenue increased 299.7% year over year to $1.78 billion during the second quarter, making the business overwhelmingly responsible for SQM’s earnings acceleration. Lithium generated approximately 78% of consolidated first-half gross profit, while six-month lithium revenue reached $2.96 billion compared with only $948.1 million during the same period in 2025.

Total Q2 lithium sales reached 84,100 metric tons LCE, up 59% from 53,100 tonnes a year earlier. Nova Andino Litio, the joint company between SQM and Codelco, contributed 75,800 tonnes, while SQM’s attributable Australian operations contributed approximately 8,300 tonnes through spodumene concentrate and lithium hydroxide.

The Australian contribution is growing particularly quickly from a smaller base. SQM’s International Lithium Division generated $124.9 million of Q2 revenue compared with just $7.1 million a year earlier, while attributable spodumene concentrate sales increased to 48,000 tonnes from 9,000 tonnes.

Pricing provided an even larger earnings catalyst. Nova Andino Litio’s average realized lithium price reached approximately $21.80 per kilogram, up almost 23% sequentially and close to 160% year over year, while average realized spodumene pricing from Australia reached approximately $2,048 per metric ton, more than 40% above Q1 and more than 160% higher year over year.

SQM currently expects lithium prices to remain relatively stable during the third quarter rather than continuing the same pace of sequential appreciation. That outlook is important because the second-quarter earnings surge reflects an unusually powerful combination of higher volumes and dramatically better pricing, making a stable-price environment sufficient for earnings to remain substantially stronger than last year even without another comparable increase.

The demand mix is also changing. SQM said strong growth from battery energy storage systems helped offset slower-than-expected expansion in the battery-electric-vehicle market, demonstrating that stationary storage is becoming an increasingly important source of lithium consumption rather than demand being dependent almost entirely on passenger EV adoption.

SQM raises lithium demand expectations as supply and consumption move toward a tighter balance

SQM now expects global lithium demand to exceed 2.1 million metric tons during 2026. Its earnings presentation described current market dynamics as indicating a tight supply-demand balance through much of the year, representing a significant shift from the oversupplied conditions that previously drove lithium prices sharply lower.

The company’s production plans reflect confidence that demand growth will continue beyond the current pricing rebound. Nova Andino Litio expects to produce approximately 280,000 to 290,000 tonnes LCE during 2026 and aims to surpass 300,000 tonnes of annual production capacity by the end of 2027.

SQM is also converting its Chilean lithium hydroxide plant into a dual-purpose facility capable of producing either lithium carbonate or lithium hydroxide depending on market conditions. The conversion is expected to be completed by mid-2027, giving the company more flexibility to respond to changes in customer demand and relative product pricing.

Australia provides another major expansion route. SQM and Wesfarmers Limited recently approved an expansion of the Mt. Holland mine and concentrator that is expected to double SQM’s attributable spodumene production capacity to approximately 350,000 metric tons per year, with first production from the enlarged operation expected in 2030.

SQM expects its attributable investment in the Mt. Holland expansion to reach approximately $450 million to $500 million between 2026 and 2029. The project demonstrates that management is committing capital based on a long-term lithium-demand thesis rather than simply responding to today’s stronger prices.

That commitment creates both opportunity and risk. If energy storage, electric vehicles and other battery applications continue driving lithium consumption above two million tonnes annually, expanded production could generate significant incremental earnings, while another period of aggressive industry oversupply could reduce returns on projects approved during the current recovery.

Salar Futuro puts another $3 billion behind SQM’s long-term lithium strategy in Chile

Nova Andino Litio submitted environmental and technical documentation for the Salar Futuro project in July, advancing what SQM describes as the next stage of its operations in the Salar de Atacama. Subject to regulatory approvals, the project contemplates approximately $3 billion of investment over about seven years, with the heaviest spending expected during the third and fourth years of development.

Salar Futuro is designed to increase lithium recovery while reducing the environmental footprint of production. SQM says the project would eliminate continental water use from the production process at the Salar de Atacama and incorporate renewable energy alongside technologies including improved recovery systems that have already been tested within existing operations.

The project forms part of a broader capital program. SQM expects approximately $3 billion of capital expenditure across the company from 2026 through 2028, with roughly 60% allocated to Nova Andino Litio, 20% to iodine and plant nutrition, and another 20% to the International Lithium Division. The forecast includes approximately $300 million of annual sustaining capital across all divisions.

SQM has considerable liquidity to fund that investment cycle. Cash and cash equivalents stood at approximately $3.38 billion at June 30, compared with $1.75 billion at the end of 2025, while other current financial assets contributed another $975.9 million. Long-term debt stood at approximately $4.79 billion.

The relationship with the Chilean state has also become more economically significant following the creation of Nova Andino Litio with Codelco. SQM and its subsidiaries accrued more than $1.6 billion of payments to the Chilean state during the first half, including corporate and mining taxes, payments connected with Corfo contracts, local-government obligations and the dividend accrued for Codelco.

This structure means the extraordinary profitability of the current lithium recovery is shared across several stakeholders rather than accruing solely to SQM shareholders. It also strengthens the strategic alignment between SQM and Chile as the company commits billions of dollars toward maintaining the Salar de Atacama as a globally significant lithium-producing region.

Iodine and plant nutrition provide additional earnings strength beyond the lithium recovery

Lithium dominates the latest results, but SQM’s other major businesses also delivered growth. Iodine and derivatives revenue reached a quarterly record $302.2 million, up 11.4% year over year, while sales volumes increased about 9% to 4,100 metric tons.

Average realized iodine pricing reached a record approximately $73.40 per kilogram, around 2.6% above the prior-year quarter. SQM continues to see strong demand from X-ray contrast media, polarizing films used in LCD displays, pharmaceutical products, biocides and industrial applications, while newer opportunities such as electronics, perovskite solar cells and next-generation refrigerants remain at earlier stages.

Management expects iodine demand to remain robust but warned that sales volumes could moderate toward year-end as additional third-party supply reaches the market. SQM is commissioning a seawater pipeline that provides greater production flexibility across four iodine operations and estimates 2026 iodine production could reach roughly 15,500 tonnes.

Specialty Plant Nutrition also benefited from tighter supply conditions. Q2 revenue increased 24% to $322.9 million as sales volumes rose 14% to 302,800 tonnes and average realized pricing exceeded $1,060 per tonne.

SQM expects full-year Specialty Plant Nutrition volumes to increase approximately 10% from 2025. Supply constraints, including lower availability from China and disruptions related to the Middle East conflict, supported pricing during the quarter, although management expects those conditions to gradually normalize toward year-end.

The diversified earnings contribution helps distinguish SQM from a pure-play lithium producer. Iodine and plant nutrition can provide additional cash generation when lithium conditions weaken, although the second-quarter numbers leave little doubt that lithium has again become the dominant driver of the company’s valuation and earnings momentum.

SQM’s 2.4% share gain suggests investors see a stronger lithium cycle but remain disciplined

SQM’s profitability expanded at a remarkable pace during the first half. Six-month revenue more than doubled to $4.23 billion, gross profit increased 267.2% to $2.04 billion and adjusted EBITDA reached $2.15 billion, producing a 51% margin compared with 32% a year earlier. Net income increased 353.5% to approximately $1.02 billion, or $3.59 per share.

The second-quarter adjusted EBITDA result was even stronger at approximately $1.32 billion compared with $307.7 million a year earlier. Combined with $660 million of quarterly net income and $1.26 billion of gross profit, those figures show how quickly SQM’s earnings respond when lithium prices recover while production volumes continue expanding.

SQM shares gained approximately 2.4% to $76.26 on August 19, giving the company a U.S.-listed market capitalization near $21.8 billion. The relatively measured reaction compared with the magnitude of the earnings increase suggests investors had already anticipated a significant lithium recovery and are now focusing on whether current pricing and demand can remain durable.

That durability will determine whether today’s earnings represent a new base or a cyclical peak. Record sales volumes, battery-storage demand and a tighter supply-demand balance support the bullish case, while SQM’s enormous expansion pipeline could eventually contribute additional global supply if competing producers pursue similar strategies.

For now, the operational evidence is considerably stronger than it was during the lithium downturn. SQM is selling record volumes at sharply higher prices, generating more than $1 billion of quarterly adjusted EBITDA and investing in projects that could materially increase future capacity, while its forecast for more than 2.1 million tonnes of global demand suggests management believes the market can absorb that expansion.

Key takeaways from SQM’s Q2 lithium rebound and 646% profit surge

• SQM’s Q2 revenue surged 136.7% to $2.47 billion, while net income increased 646.4% to $660 million.
• Adjusted EBITDA reached approximately $1.32 billion, more than four times the $307.7 million recorded a year earlier.
• Lithium and derivatives revenue jumped approximately 300% to $1.78 billion, making lithium the dominant earnings driver.
• Quarterly lithium sales reached a record 84,100 tonnes LCE, representing 59% year-over-year growth.
• Nova Andino Litio’s realized lithium price reached about $21.80 per kilogram, nearly 160% higher year over year.
• SQM now expects global lithium demand to exceed 2.1 million metric tons in 2026, supported partly by battery energy storage.
• Nova Andino Litio expects 280,000–290,000 tonnes of 2026 lithium production and more than 300,000 tonnes of capacity by end-2027.
• Salar Futuro could require approximately $3 billion of investment over seven years, subject to regulatory approvals.
• Iodine revenue reached a quarterly record $302.2 million, while realized iodine pricing hit roughly $73.40 per kilogram.
• SQM shares gained approximately 2.4% to $76.26 on August 19 as investors responded to the lithium earnings rebound.