Albemarle, SQM gain as broad lithium ETF slips
A split between falling lithium ETFs and rising shares in Albemarle and SQM shows investors are prioritizing low-cost South American producers ahead of forecast supply deficits.
The Global X Lithium & Battery Tech ETF closed at $68.38 on July 17, down 0.70%, even as its most prominent holdings posted notable gains. Albemarle rose 1.10% to finish at $120.78, while Chilean competitor SQM surged 5.25% to close at $69.81.
This pricing divergence signals a decisive shift away from passive, basket-based lithium investing. Rather than buying the sector indiscriminately, capital is rotating toward established producers with direct access to low-cost brine operations. Investors are increasingly differentiating between companies based on their ability to navigate regional risks and actually deliver output.
The flight to quality is driven by a tightening supply-demand outlook. Global lithium-ion battery deployment in 2025 was roughly six times the level seen in 2020. Electric vehicles currently account for an estimated 63% to 70% of lithium use, a share projected to grow as the automotive transition accelerates.
Grid-scale battery storage is emerging as an additional demand engine as Latin American nations connect more renewable energy to their power networks. Analysts at Canaccord Genuity and Wood Mackenzie warn that this combined demand trajectory will outpace supply, with their models pointing to market deficits emerging between 2026 and 2028 unless investment increases sharply.
The supply pressure is centered on the Lithium Triangle—spanning Chile, Argentina, and Bolivia—which holds approximately 58% of the world's identified lithium resources. While brine extraction from these high-altitude salt flats is inherently cheap, converting those reserves into reliable production is proving difficult. Bolivia, despite holding the largest single reserve base, remains a minor producer due to technical and political hurdles.
In Chile and Argentina, project timelines are threatened by water stress, community opposition, and a push by governments to capture more value locally. Policymakers in Santiago, Buenos Aires, La Paz, and Brasilia are actively exploring ways to force the domestic production of battery chemicals and finished vehicles, moving away from the export of raw materials.
This regulatory shift introduces significant uncertainty for new market entrants while rewarding incumbents. Albemarle is benefiting from a diversified footprint that pairs Chilean brine assets with US operations to cushion regional shocks. SQM is drawing bids for its position in the Atacama salt flat, which yields some of the lowest production costs in the global industry.
