The CEO of Chilean lithium miner SQM said on Thursday he expects prices for the key battery metal to hold steady in the third quarter from the prior three-month period, while predicting demand would keep growing.

SQM, the world's second-largest lithium producer, reported a larger-than-expected drop in second-quarter earnings on Wednesday, dragged down by lower average selling prices for lithium even as it shifted larger volumes.

"Since mid-June we have seen some negative trends in the Chinese index, followed by other indexes later on," CEO Ricardo Ramos said in an earnings call, adding that the company's selling prices have various lags to spot prices depending on its contracts.

"All in all, I hope that we can have a relatively similar price in the third quarter compared to the second," he said, when asked what the company's expectations were for the July-September period.

Lithium prices have sky-rocketed over recent years amid soaring demand from the electronics sector and car makers, as more stringent environmental regulations drive a shift towards battery-powered vehicles.

Lithium miners, largely operating in Australia, Chile, China, have rushed to ramp up output, but prices have fallen back from their records amid slowing demand from China.

SQM posted nearly a 37% year-on-year drop in the average price it received for its lithium in the April-June period and a 33% fall from the first quarter, even as its sales volumes soared.

'EV GROWTH IS BACK'
The company forecast higher sales volumes to continue into the second half of the year, while analysts at Itau BBA pointed to a strong demand outlook from EV makers in China, the United States and Europe.

"EV growth is back," Itau BBA said.

J.P. Morgan analysts said while the past quarter should mark "the weakest of the year for pricing," it did not materially change their expectations for the rest of 2023.

"This quarter once again had very relevant monthly price volatility and we likely underestimated the amount of product sold at the lows of the market," the J.P. Morgan analysts said.

SQM did not provide an update on its talks with state miner Codelco amid Chile's plans to strengthen state control over the country's vast lithium reserves, but said the negotiations were taking place "in good faith."

Chile was the world's second-biggest producer of lithium last year after Australia, according to estimates from the US Geological Survey.