Lithium Producer SQM Sees Global Demand Growing 25% This Year

Sociedad Química y Minera de Chile (SQM) and Codelco's joint venture, Nova Andino Litio SpA, produced 233,000 metric tons of lithium carbonate equivalent in 2025, exceeding its production target. This output marked an increase compared to 2024 levels and helped the industry recover from a recent global oversupply. The company aims to increase production by 30% by 2030, with a goal of reaching 300,000 tons of lithium before the end of the decade.

SQM reported a net income of US$588.1 million for the twelve months ended December 31, 2025, reversing a prior-year loss of US$404.4 million. The company cited record lithium sales volumes, a strong iodine price environment, and operational milestones such as the first lithium hydroxide shipments from Kwinana. In its fourth quarter, SQM's gross profit reached US$448.5 million, reflecting a 52.7% increase compared to the same period in 2024.

Zimbabwe's government suspended the export of lithium concentrates and raw minerals on February 25, 2026, citing the need for local processing. The move immediately impacted global lithium markets, with spot prices for lithium carbonate in China rising by 6% to 7%. This export ban follows similar measures by other African nations to encourage domestic processing of minerals and increase economic benefits from their resources.

Why the Move Happened

SQM's production increase and market optimism are driven by strong demand from energy storage systems (ESS) and electric vehicles (EVs). The company reported early signs of an improved supply-demand balance in November 2025, as demand outpaced supply expectations. Additionally, SQM is expanding its operations at the Salar de Atacama and increasing refinery capacity in China through tolling agreements.

In Australia, SQM operates at full capacity in spodumene concentrate production and recently shipped its first lithium hydroxide from the Kwinana refinery. This product has been certified with a 37% lower emissions footprint compared to traditional hard-rock production methods.

How Markets Responded

Zimbabwe's export ban tightened supply conditions, causing a sharp rise in lithium prices in China. Lithium carbonate prices climbed to 160,000-162,000 yuan per tonne, compared to 150,000-152,000 just a day prior. This price increase reflects the growing supply constraints and the importance of lithium in battery production for EVs and ESS.

SQM's stock price advanced by 4.41% to $80.10, while other lithium producers like Albemarle and Sigma Lithium also saw gains. The market is closely monitoring SQM's upcoming earnings report on February 26 for insights into demand trends and pricing.

What Analysts Are Watching

SQM aims to enhance efficiency at the Atacama salt flat by implementing direct extraction methods, which require regulatory approval. These methods are designed to boost output while minimizing environmental impact. The company also plans to expand oversight at the El Teniente underground copper mine following a fatal collapse in July 2025.

Analysts are also watching the impact of Zimbabwe's export ban on global lithium markets. If the ban persists, it could lead to further price increases and tighter supply conditions for refiners and battery manufacturers. The ban could also encourage other countries to implement similar policies, potentially reshaping the global lithium supply chain.