Context and Chronology

Leading lithium miner SQM raised its demand expectation to roughly 25% growth for the year and disclosed fourth‑quarter sales above 66,000 metric tons. Management connected the demand rebound to stronger electric‑vehicle deliveries and rising utility‑scale storage procurement, while flagging margin pressure and the need for disciplined capital allocation as prices and feedstock sourcing evolve.

The SQM update sits alongside other recent industry disclosures that complicate the simple narrative of a tightening market. Nova Andino Litio SpA — the SQM–Codelco joint venture — reported roughly 233,000 tonnes LCE of shipments for 2025, a modest beat to prior guidance that signals upstream Chilean throughput is increasing. Separately, a SEIA/Benchmark assessment projects about 70 GWh of U.S. battery deployments in 2026 (up ~21% year‑on‑year), illustrating persistent near‑term demand from grid and commercial storage even as regional demand mixes diverge.

These data points together create a nuanced picture: inventories and trader behavior have shifted from multi‑quarter oversupply toward a more balanced, increasingly sensitive market. The Nova Andino ramp supplies more feedstock into the chain, but SQM and market forecasters emphasize that conversion, cathode and precursor bottlenecks — and the timing of greenfield versus brownfield projects — will govern how quickly additional upstream tonnes translate into battery‑grade inputs.

Operationally, the immediate risk is not a single large shortfall but rather a patchwork of mismatches across the value chain. OEMs and cell producers are already reallocating some capacity to stationary products to capture near‑term demand, and procurement teams are shortening lead times and accelerating renegotiations. That behavior will compress availability for smaller buyers and raise the premium for spot purchases while favoring large integrated players with secured offtake.

Strategically, SQM’s sales and guidance reverberate through capital allocation decisions: shelved greenfield projects face renewed scrutiny, brownfield scaling looks comparatively attractive, and governments’ policy levers (royalties, export rules, local processing mandates) will increasingly influence who captures value as prices firm. Expect heightened price discovery, periodic spot spikes, and a wave of contract activity as market participants re‑lock volumes and financiers re‑assess project risk premia.

In sum, this is an inflection in which both rising demand signals and selective upstream ramping coexist. The net market outcome will depend on how quickly conversion and refining capacity scales, how integrated producers manage offtake, and whether incremental upstream volumes — like those from Nova Andino — arrive in time and in the required chemical forms to satisfy cell manufacturers.