Sociedad Quimica y Minera de Chile (SQM +9.02%) stock, "SQM" to its friends, jumped 12.7% through 12:30 p.m. ET Monday on positive news out of China.
As Reuters reports today, Ganfeng Lithium Group chairman Li Liangbin believes global lithium demand could grow 30% to 40% in in 2026.
Image source: Getty Images.
More demand, higher prices -- and more profit
Lithium carbonate contracts on China's Guangzhou Futures Exchange surged 9% in response to Chairman Li's comments, closing at 95,200 yuan ($13,401.28) per metric ton Monday. This is the highest price per ton this battery component has fetched since June 2024.
And yet, the news for lithium miners could be even better. Following Reuters' report, Mining.com reports that Chairman Li predicts lithium prices could rise as high as 150,000 yuan, or even 200,000 yuan, per ton. Thus, a 30% to 40% rise in demand could translate into a 58% to 110% surge in lithium prices.
Assuming costs remain largely unchanged, the increase in profits for lithium stocks could be even greater.
NYSE: SQM
Key Data Points
Is SQM stock a buy?
Things were already looking up for SQM before this Reuters report came out. After losing money in 2024, analysts polled by S&P Global Market Intelligence predict SQM will earn $2.26 per share this year -- and grow profits 35% to $3.06 per share in 2026. And these analyst forecasts came before Chairman Li's prediction.
If he's right about demand and price growth in 2026, then SQM's profits could be even mightier.
Paying less than 35 times earnings (SQM currently has a 32.6 P/E ratio) for 35% earnings growth is the very definition of buying a value stock. Paying 32.6x for a company that might grow earnings more than 35% could be an absolute steal of a deal.
SQM stock sure looks like a buy to me.
