Sociedad Quimica Y Minera De Chile Earnings Call NUGGETS: SPN Division Premiums, Iodine Prices

On Thursday, Sociedad Quimica Y Minera De Chile SA ADR (NYSE:SQM) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.

SPN Division Premiums

Fernando Ferreira – Bank of America-Merrill Lynch: I have two questions actually, first one, it seems the premium of the SPN division relative to potash has been increasing lately. I would like to know if that’s the case and if so, if you can tell us where these premiums are today and why they have been increasing lately?

Eugenio Ponce L – SVP Commercial: Yes, that is correct. Eugenio Ponce speaking. SPN products has been increased price this year compared with last year around $50, and this has been because the market accept this and also we increased our prices of potassium sodium nitrate in Brazil and we signed several contracts with premium price compared with last year. That has been the increase on prices of the specialty plant.

Fernando Ferreira – Bank of America-Merrill Lynch: Do you expect this premium to be maintained going forward or you’ve been increased more?

Mark Fones – IR: We believe this premium will be maintained in the short-term.

Fernando Ferreira – Bank of America-Merrill Lynch: Then my second question would be on lithium. I’d like to understand a little bit better about what’s your strategy going forward in the market as SQM is nearly running at fully capacity in your plant, so I would like to understand better your strategy for pricing, if we’re going to follow price increases going forward, and also regarding the consolidation that we have been seeing in the sector in past few weeks?

Eugenio Ponce L – SVP Commercial: We will keep our current business strategy in lithium as you have seen in our press release. Our prices increased in 2012 compared with 2011 around 10%. However, we see that in the short-term prices to remain same. Now we are – of course demand of lithium as you know is expanding, is improving year-by-year, therefore, we are already starting expansions in our production facility that we will announce in the near future.

Iodine Prices

Giovana Araujo – Itau: My first question is on iodine. What prices do you expect to the end of the year and for 2013? Can you give us an overview of the whole market supply situation in what we believe will be the structural prices going forward?

Eugenio Ponce L – SVP Commercial: We see the prices will remain stable for the rest of the year and most probably also for next year. We see that demand is still growing and is growing more or less at the same pace that in the last years, even we see a little bit recovery in certain markets, in certain uses for iodine next year, they were a little bit low this year. So, demand could grow a little bit more next year than this year. Now, as you also know, there are some newcomers, but we have publicly announced that they will come in the market – mainly they are coming now in the second semester and also I think it was in the previous conference call, also it was mentioned by SQM. So, they will capture part of this growing demand.

Giovana Araujo – Itau: My question is about potash, what do you expect in terms of volumes for the – deliver volumes to the end of the year and how do you see the demand on potash market globally over the next 12 months considering the situation in Asia, the prospects for Brazilian purchase and also the situation in the U.S. market?

Eugenio Ponce L – SVP Commercial: Well, in potash, actually we are a very small producer of potash. We just follow the big ones and regarding prices. Now regarding volumes, we see that this year demand will be lower in general terms than last year. We are following what the big producers are doing and we are mainly selling in the surrounded countries. We felt very few in Asia, relative terms in Asia and we concentrate with our small volumes in the surrounding countries.

Giovana Araujo – Itau: In that context, do you expect some decrease in prices – stable prices for the next – for the rest of the year?

Eugenio Ponce L – SVP Commercial: We expect the prices for us will remain stable for the rest of the year.