SQM Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue Growth: SQM reported strong financial results for Q1 2026, with total sales volumes of lithium carbonate equivalent increasing by 25% year-over-year to approximately 69,000 metric tons.

Average Sales Price: The average sales price for lithium was approximately $18 per kilo, a significant increase from $10 per kilo in Q4 2025.

Cash Position: The company ended the quarter with higher cash and cash equivalents compared to the previous year, primarily due to increased prices of lithium, iodine, and nitrates.

Tax Payments: The effective tax rate was higher than usual due to increased profitability, leading to higher mining taxes.

2Strategic Updates and Business Highlights

Novandino Lithium Partnership: The partnership with Codelco has begun operations, contributing over $530 million to the Chilean state in Q1 through various payments.

Lithium Demand: Global lithium demand is projected to exceed 1.9 million metric tons in 2026, prompting SQM to raise its sales volume guidance for lithium by 15% compared to 2025.

Salar Futuro Project: The environmental permitting process for the Salar Futuro project is expected to begin soon, with an estimated total investment of around $3 billion.

Specialty Plant Nutrition (SPN): Sales volume guidance for SPN has been increased to approximately 10% growth due to reduced potassium nitrate exports from China, creating supply gaps.

3Forward Guidance and Outlook

Lithium Sales Volumes: SQM expects strong sales volumes in Q2 2026, aiming to surpass Q1 2025 volumes by over 10%.

Pricing Outlook: The company anticipates that average realized prices for lithium in Q2 will be higher than in Q1, although the market remains volatile.

Iodine and SPN Pricing: Continued price increases are expected for iodine and potassium nitrate due to supply constraints and geopolitical factors.

4Challenges and Points of Concern

Market Volatility: The lithium market remains highly volatile, making it difficult to predict pricing beyond Q2.

Inflation Impact: Rising inflation and geopolitical tensions (e.g., the Iran war) may affect capital expenditures and operational costs, particularly for the Salar Futuro project.

Operational Costs: While cash costs are expected to improve, the iodine segment has faced higher costs due to ramp-up activities and increased raw material prices.

5Notable Q&A Insights

Lithium Pricing: Management indicated that while current prices are favorable, predicting mid-cycle pricing remains challenging due to market volatility.

Cash Deployment: Discussions on capital allocation include potential special dividends, but no decisions have been made yet. The company will prioritize obligations to CORFO and ongoing CapEx needs.

BESS Demand: The share of lithium demand from Battery Energy Storage Systems (BESS) is expected to rise to around 30% in 2026, reflecting growing market trends.

Iodine Market Dynamics: Concerns were raised about potential supply increases in the iodine market, but management expressed confidence in sustained pricing due to changes in demand dynamics and production costs. Overall, SQM's Q1 2026 results reflect strong operational performance and positive market conditions, although challenges related to market volatility and inflation remain pertinent.