Is lithium really in short supply?

As for the possibility of lithium carbonate prices falling below RMB 100,000 per ton in the future, few people seem to believe it will happen. If lithium—the core metal of new energy—cannot generate profits, then which energy metal, or indeed which metal or mineral, *should* be profitable? Mining and refining are arduous, labor-intensive activities—and today, relatively few are willing to undertake such hard work. Accordingly, returns must be commensurate and respectable; upstream producers cannot perpetually work for free to subsidize downstream players. Assuming a 2025 lithium carbonate price ceiling of RMB 150,000/ton: From a P/E perspective—even viewed as a cyclical stock—it remains relatively attractive. This is because the P/E ratio is calculated at the price trough: with lithium carbonate at RMB 150,000/ton, many lithium miners trade at P/E ratios below 10. Assuming a 2025 lithium carbonate price floor of RMB 100,000/ton: It becomes evident that, under current expansion plans, most lithium mines would still trade at P/E ratios below 20 at RMB 100,000/ton—with some even below 10x. Leading players: Ganfeng Lithium (19x), Tianqi Lithium (36x), Yankuang Salt Lake (10x), Chenguang Mining (10x), Jiangte Motor (38x), Tibet Urban Investment (21x), Tibet Summit (5x—on an equity basis only), Keda Manufacturing (15x), Sinomine Resource (10x), Rongye Shares (30x), Tibet Mining (31x—not just PowerPoint lithium anymore), Tianhua Ultra-Clean (15x), Sichuan Energy Power (47x), Yongxing Materials (25x), Yaha Group (11x), Shengxin Lithium (19x), Jinyuan Shares (16x). Minor discrepancies may exist—mines in Sichuan and Jiangxi may face higher costs—but overall, valuations fall within this range. Additionally, note that U.S.-listed lithium miners release profits much more slowly than their A-share counterparts, primarily due to long-term contracts constituting the bulk of their sales. For example, while domestic spot prices stood at RMB 400,000–500,000/ton this year, long-term contract prices hovered around RMB 250,000–300,000/ton. In contrast, U.S. lithium miners rely predominantly on long-term contracts; thus, both price adjustments and profit recognition lag significantly. For instance, SQM and Albemarle averaged ~USD 6,000/ton for lithium carbonate in 2021; after Q4 price adjustments, that rose to no more than USD 10,000/ton. In Q2 2022, their long-term contract prices were approximately USD 15,000–20,000/ton. Notably, SQM reduced its long-term contract share in 2022, potentially accelerating profit realization. U.S. lithium stocks not only recognize profits slowly but also exhibit sluggish stock-price reactions to price and earnings changes—unlike A-share lithium stocks, which often surge threefold or fivefold on mere expectations. U.S. markets tend to adopt a ‘no rabbit, no hunt’ approach: share prices won’t move ahead of actual profit realization. For example, SQM’s quarterly profits have recently risen steadily, and its stock has trended upward over the past six months—while Tianqi Lithium’s stock has declined. Last year, A-share lithium miners surged sharply on high expectations, whereas SQM’s slower profit recognition translated into a more gradual stock-price ascent. With profits now materializing, SQM’s stock is likely to continue rising through this year. Current valuation metrics: Tianqi Lithium trades at PB 7.44 and static P/E 70; Ganfeng Lithium at static P/E 27.9 and PB 6.66; U.S.-listed pure-play lithium miner LAC at PB 6.73 (currently unprofitable); Livent at P/E 5,763 and PB 4.54; Albemarle (lithium-focused) at P/E 187 and PB 4.18; SQM (lithium-focused) at P/E 38 and PB 6.98. As first-quarter reports are released, these P/E ratios will decline across the board. In summary, mainstream A-share lithium miners currently trade at valuations broadly comparable to those of U.S. lithium miners—both reflecting *already realized* earnings. These are classic cyclical-stock valuations.

With winds rising and clouds soaring—among U.S. lithium resource stocks, who stands strongest? A deep-dive analysis of SQM, LTHM, and LAC.

Over the past five years, SQM’s financial performance has exhibited significant volatility, closely tracking lithium product price swings. Its five-year average P/E ratio has remained around 30x. The two charts above clearly show SQM’s substantial revenue fluctuations. From 2015 to 2018, buoyed by surging lithium prices, the company’s revenue grew steadily—while net profit growth outpaced revenue. Net profit rose from USD 213 million in 2015 to USD 428 million in 2017—a doubling—primarily driven by lithium price increases. SQM’s latest quarterly results: In Q1 2021, SQM’s total revenue increased 35% year-on-year, while revenue from its lithium division surged 107% YoY, with sales volume up 179% YoY. In its earnings call, the company projected full-year lithium and derivative product sales revenue to reach 85,000 tons, with average selling prices gradually rising. SQM’s capacity ramp-up and forward outlook: Regarding capital expenditures, SQM expects total capex from 2021 to 2024 to reach USD 2 billion—up sharply from USD 500 million in 2021. Of this, USD 1.1 billion will fund lithium and derivative capacity expansion. Over the next three years, SQM’s capacity rollout will accelerate markedly. Against the backdrop of carbon neutrality, the lithium industry is entering an accelerated growth phase. According to company disclosures, 97.4% of the electricity SQM uses in lithium production comes from solar power—achieving clean energy integration. By 2023, SQM’s lithium carbonate equivalent (LCE) capacity will reach 180,000 tons, making it the world’s second-largest lithium supplier after Albemarle. Based on company announcements, we estimate SQM’s capacity ramp-up timeline: starting in 2021, the company enters an accelerated capacity-release phase, with total capacity exceeding 200,000 tons by 2023. Thus, during the current lithium price upcycle, we remain highly optimistic about SQM’s earnings elasticity. The two charts above illustrate SQM’s prior earnings leverage during the last lithium upcycle: battery-grade lithium carbonate prices surged fourfold—from ~CNY 40,000/ton to over CNY 160,000/ton—and as the lowest-cost lithium producer, SQM saw outsized profit expansion. We therefore strongly favor SQM’s earnings upside driven by rising lithium prices. Since Q2, lithium product prices have again accelerated upward—making SQM’s full-year performance highly promising. Livent (LTHM): Livent Corp. is a specialized, fully integrated lithium battery materials company with a long-standing track record of producing high-performance lithium compounds. Its core products—battery-grade lithium hydroxide, butyllithium, and high-purity lithium metal—are critical components across numerous high-performance applications. The company’s strategy focuses on supplying high-performance lithium compounds to the rapidly expanding electric vehicle (EV) battery market, while maintaining its global leadership position in butyllithium and high-purity lithium metal production. Following its spin-off from FMC, Livent gained access to the exceptionally high-quality Hombre Muerto salt lake in Argentina, and serves top-tier automotive OEMs as key downstream customers. Per its capacity roadmap, Livent plans to expand lithium hydroxide capacity to 30,000 tons by 2022 and lithium carbonate capacity to 40,000 tons by 2023.

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Financial analysts project Sociedad Quimica y Minera de Chile SA (SQM) stock price targets and ratings through 2027. The analysis includes key financial metrics such as EPS, revenue, and volatility alongside upcoming earnings reports.

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SQM Stock Price Target Forecast for 2027

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SQM Stock Price Forecast and Target Prediction for 2027

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