SQM Q1 Net Profit Doubles on Lithium But Misses Estimates
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
sqmlithium
Fazen Markets Editorial Desk
Collective editorial team · methodology
Trades XAUUSD 24/5 on autopilot. Verified Myfxbook performance. Free forever.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The majority of retail investor accounts lose money when trading CFDs. Vortex HFT is informational software — not investment advice. Past performance does not guarantee future results.
Chile's Sociedad Química y Minera de Chile (SQM) announced on 27 May 2026 that its first-quarter net profit doubled year-over-year. The world's second-largest lithium producer reported net income of $1.2 billion for the period ending 31 March. This result failed to meet consensus analyst estimates, which had projected profits closer to $1.29 billion. The performance underscores the complex market dynamics facing lithium producers even amid elevated prices.
The earnings report arrives as lithium prices stabilize at historically high levels following a period of extreme volatility. The S&P GSCI Lithium Index averaged 15% higher in Q1 2026 compared to the same quarter a year prior. The last time SQM reported a quarterly profit exceeding $1 billion was in Q4 2024, when net income reached $1.15 billion amidst a previous price spike. The current macro environment features persistent demand from the electric vehicle sector, but this is now tempered by increased supply coming online from new projects in Australia and Africa.
What changed to trigger the earnings miss now is a combination of operational and cost pressures. While average realized sales prices for lithium carbonate and hydroxide remained firm, SQM faced higher royalty payments to the Chilean state under a new contract finalized in late 2025. Concurrently, sales volumes from its key Atacama Salt Flat operations were constrained. This reflects both competitive draw on brine resources and the logistical complexities of expanding production in a sensitive environmental region.
The core financial metrics reveal a strong top line tempered by rising costs. SQM's Q1 2026 revenue reached $3.8 billion, a significant increase from $2.1 billion in Q1 2025. The company's net profit margin for the quarter was 31.6%, down from an estimated 35% implied by analyst forecasts. A peer comparison shows Albemarle, the global lithium leader, reported a Q1 2026 net profit margin of approximately 34%.
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Revenue | $3.8B | $2.1B | +81% |
| Net Income | $1.2B | $600M | +100% |
| Est. Miss | $1.2B | $1.29B | -$90M |
Lithium carbonate spot prices in China, a key benchmark, averaged $21,500 per tonne during the quarter. This represents a 25% year-over-year increase but a 5% sequential decline from Q4 2025 levels. SQM's earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $1.9 billion, yielding an EBITDA margin of 50%.
The earnings shortfall signals potential headwinds for pure-play lithium equities, though chemical and battery makers may see a relative benefit from stabilized input costs. Companies like Albemarle (ALB) and Livent (LTHM) could face similar margin pressure from rising operational and royalty costs. Conversely, battery manufacturers such as Contemporary Amperex Technology Co. Limited (CATL) and automakers with large EV ambitions like Tesla (TSLA) may gain negotiating use if producer cost inflation eases price upside.
A key risk to this analysis is that SQM's issues are largely company-specific, related to its Chilean operations, and may not reflect the broader industry. The acknowledged limitation is that new, low-cost lithium supply from direct lithium extraction (DLE) projects remains unproven at scale and could disrupt the market later. Positioning data shows institutional investors have been reducing net long exposure to lithium miners over the past quarter, with flow moving toward battery technology and recycling plays as a hedge against raw material volatility.
The immediate catalyst for lithium markets is the monthly China Passenger Car Association sales data for May, due on 8 June 2026. This will provide the next signal for EV demand strength. The next major window for SQM specifically is its Q2 2026 earnings report, scheduled for late August 2026. Market participants will scrutinize whether cost pressures are abating and if sales volumes recover.
Key levels to monitor include the $20,000 per tonne support level for lithium carbonate in China. A sustained break below could pressure miner margins further. For SQM's stock, the 200-day moving average, currently near $58, represents a critical technical support zone. The direction of these levels will be conditional on the EV sales data and progress on new supply agreements.
The miss suggests producer profitability is being squeezed despite high prices, primarily due to rising costs. This can cap the upside for lithium prices in the near term, as it indicates the market may not support further significant price increases without damaging demand. However, structural demand from the energy transition provides a floor. The price trajectory will depend more on the balance between EV production rates and the pace of new mine supply coming online over the next 18 months.
Albemarle's most recent quarter showed stronger margin resilience, with a net profit margin around 34% compared to SQM's 31.6%. This divergence highlights differing cost structures and geographic exposures. Albemarle's more diversified asset base, including hard-rock mining in Australia, may provide some insulation from the specific royalty and operational challenges SQM faces in Chile. Investors often view Albemarle as a more stable bellwether for the sector.
Lithium has experienced several boom-and-bust cycles over the past decade. A major price crash occurred in 2019-2020 when oversupply pushed carbonate prices below $8,000 per tonne. The subsequent rally peaked in late 2022 above $80,000 per tonne before correcting. The current period represents a consolidation phase as the market seeks equilibrium between explosive EV demand growth and a rapid, but sometimes delayed, supply response from new mining and refining projects globally.
SQM's profit doubling alongside an earnings miss reveals the lithium market's transition from a pure price-driven boom to a phase defined by cost control and execution.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
Vortex HFT is our free MT4/MT5 Expert Advisor. Verified Myfxbook performance. No subscription. No fees. Trades 24/5.
Trade gold, silver & commodities — zero commission
Start TradingSponsored
Open a demo account in 30 seconds. No deposit required.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.