One of the world's largest lithium producers, SQM, has just sent a strong signal that the challenging two-year slump in the lithium market may finally be over.
The company announced record-high sales volumes and, more importantly, projected that global lithium demand will grow by about 25% in 2026. This is significant because it's not just speculation; it's a forecast from a major industry player with a direct view into the order books for electric vehicles (EVs) and large-scale batteries for power grids.
So, what led to this turning point? This optimism didn't emerge from a vacuum. The foundation for this recovery was built over the past year through several key developments. First, the price of lithium itself has staged a remarkable comeback. After hitting a painful low in mid-2025, prices for lithium carbonate in China more than doubled by early 2026. This price surge was the first clear sign that the market balance was shifting as unprofitable producers cut back supply.
Second, the demand story proved to be incredibly resilient. Despite some concerns about a slowdown, global EV sales grew a healthy 20% in 2025, reaching nearly 21 million vehicles. Crucially, a powerful second engine for demand has emerged: Energy Storage Systems (ESS). China, in particular, has been installing massive battery farms to stabilize its power grid, creating a significant new source of lithium consumption alongside EVs.
Third, the supply side has been hit with unexpected disruptions. While some supply was already taken offline due to low prices, Zimbabwe suddenly banned all exports of raw lithium in February 2026. This move instantly tightened the market by removing a notable slice of global supply, reinforcing the price uptrend.
Finally, SQM has solidified its own strategic position. By forming a long-term joint venture with Chile's state-owned Codelco, the company has secured its access to the low-cost, high-quality Atacama salt flats until 2060. This de-risks its future operations and ensures it can reliably meet growing demand, putting pressure on higher-cost producers elsewhere. Together, these factors—recovering prices, robust multi-source demand, supply discipline, and strategic positioning—created the perfect backdrop for SQM's confident outlook.
- Spodumene: A mineral sourced from hard-rock mines that is a primary raw material for producing lithium chemicals.
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's overall financial performance and is often used as an alternative to net income.
- Offtake Agreement: A long-term contract between a producer and a buyer to purchase or sell portions of the producer's upcoming output.