Chile’s Chemical and Mining Society (SQM), the world’s second largest lithium producer, continues to suffer from sustained weak prices for the metal used in batteries that power electric vehicles (EVs) and high tech electronics, with profit falling almost 38% in the in the last quarter of 2019.
The Santiago-based company posted fourth-quarter net income of $66.9 million, compared to $108.6 million in the same period in 2018. Gross profits dropped more than 30% to $137.8 million.
Sales to China, the top consumer of battery metals, could be hit by impact of the coronavirus in the first months of the year
The lithium giant said that sales to China, the top consumer of battery metals, could be hit by the impact of the coronavirus.
Chief executive Ricardo Ramos said the company was already seeing signs indicating shipments were “getting back to normal.”
“At this point, we believe sales volumes related to the lithium business line in China could be lower during the first quarter of 2020 when compared to our original expectations,” Ramos said.
“Depending on the evolution of the coronavirus outbreak, we may be able to recover some of those sales volumes and reach 55-60k metric tonnes in 2020,” he added.
SQM noted that lithium demand improved last year, up 14% compared to 2018, which it qualified as “significant” but “lower than expected.”
The company believes the fundamentals behind demand growth in the lithium industry are stronger than ever and expects Europe to be the main consumer this year on the back of an expected EV boom.
Last month, however, its main rival provided a gloomy outlook. Albemarle (NYSE: ALB), the world’s No. 1 lithium miner, reported lower-than-expected profits in late 2019 and forecasted a double-digit drop in 2020 earnings on weak prices for the white metal.
