Shares of SQM's preferential stock climbed over 3% in Santiago on Tuesday after Scotiabank reiterated a bullish assessment of the Chilean lithium producer. The bank said a recent round of meetings with SQM executives reinforced its expectations for rapid growth in lithium demand and highlighted SQM's cost advantages at the Salar de Atacama.
In a note issued after conversations with SQM Chief Financial Officer Gerardo Illanes and Head of Investor Relations Isabel Bendeck, Scotiabank maintained a "Sector Outperform" rating and preserved its $105 price target. The bank also identified SQM as one of its top picks for 2026.
Scotiabank reported that SQM views lithium incentive pricing to be around $18 per kilogram, sitting within a broader range of $15 to $20 per kilogram. The bank said it expects demand to expand sharply through the end of the decade, a pace that will require additional supply from new market entrants.
Cost metrics were a central theme in the meetings. Scotiabank said SQM's all-in lithium cost, excluding payments to Chile's state development agency Corfo, is about $4,500 per metric ton. That cost position, the bank noted, helps maintain SQM among the industry's lower-cost producers.
The discussions also touched on capacity decisions abroad. Scotiabank said SQM expects to make a decision in coming months on whether to pursue an expansion at the Mt. Holland project in Australia. If advanced, the expansion could double capacity at that site to 100,000 metric tons, with half of that incremental capacity attributable to SQM.
Beyond raw supply figures, the bank said SQM sees strong economics in battery energy storage systems, or BESS. In that context, Scotiabank said lithium demand growth is increasingly being driven by cost competitiveness rather than by consumer preference.
Scotiabank also relayed that SQM does not expect to hold its current market share indefinitely, noting that the pace of industry growth is too rapid for any single producer to maintain position alone. The company indicated that environmental permitting remains the primary constraint on new lithium supply.
Market reaction - The bank's reaffirmation and the details from its meetings with SQM management coincided with the noticeable uptick in the company's preferential shares in Santiago trading.