SQM, the world’s biggest lithium producer by market value, boosted its sales guidance for this year and struck a note of optimism on prices after posting a 28% slump in second-quarter core earnings.

Attributable core earnings before items fell to $307.9 million last quarter, the firm said in a statement. But the Chilean producer of the battery metal is pressing ahead with an expansion, saying sales volumes from its domestic plants will grow 10% this year. It also lifted sales guidance for its Australian operations.

Lithium has suffered from a severe global glut that has hammered prices, although output cuts in China have fueled a recent rebound — albeit to levels that are still more than 80% below their peak. The firm maintained a forecast for global demand growth of about 17% this year.

“Recent market dynamics make us believe that third quarter prices could be higher than the second quarter,” SQM said in slides accompanying its earnings statement.

The company’s shares were down 2.9% at 9:37 a.m. in New York. They surged to their highest in more than a year earlier this month, joining a rally for global producers of lithium after a major mine halted output in China. The operation run by battery giant Contemporary Amperex Technology Co. Ltd. should be closed for at least three months.

Santiago-based SQM, formally known as Soc. Quimica & Minera de Chile SA, boosted sales guidance for its international division to about 20,000 tons of lithium carbonate-equivalent. It didn’t give a volume figure to clarify the 10% increase for its Chilean division.

SQM added that its Kwinana refinery joint venture in Australia achieved first commercial production in July. The facility should hit nameplate capacity of 50,000 tons of lithium hydroxide by end-2026, with half attributable to SQM, it said.

Lithium prices have languished under the weight of excess supply after new mines came on stream and demand growth slowed. SQM’s volumes-over-value approach has contrasted with cutbacks by some higher-cost producers. The company has budgeted $750 million in capital expenditure this year as it lifts annual capacity in Chile to 240,000 tons of lithium carbonate in 2026 and 100,000 tons of hydroxide by end-2025.

The firm’s total revenues fell 19% in the second quarter to about $1 billion as spot lithium prices endured their worst period in many years. Sales volumes were lower than the first quarter.

“Some of the contracts we had in place, hit the lower limits set in those contracts, affecting the volumes agreed,” chief executive officer Ricardo Ramos said in the statement.

(By James Attwood and Annie Lee)