Nov 18 (Reuters) -

Chilean lithium producer SQM on Tuesday reported a

rise in third-quarter net profit, helped by an improved pricing

environment that lifted average lithium prices for the first

time in two years.

The world's second-largest lithium producer said net

income for the quarter ended September 30 was $178.4 million,

or $0.62 per share, compared with $131.4 million a year earlier.

Revenue for the quarter rose 8.9% to $1.17 billion, from

$1.08 billion in the same period last year.

SQM said revenues for lithium and derivatives increased

21.4% to $603.7 million in the quarter, driven by

stronger-than-expected demand.

"We expect this upward trend to continue through the

fourth quarter, supported by strong demand for lithium, not only

from electric vehicles (EV) but also from energy storage systems

(ESS)", SQM's CEO Ricardo Ramos said.

SQM, one of only two companies producing lithium in

Chile, also makes fertilizers and industrial chemicals.

Lithium prices have cooled from record highs in 2022 as

supply growth outpaced demand, pressuring margins for global

producers including SQM and rivals such as U.S.-based Albemarle.

Still, demand for the battery metal is expected to rise

in the coming years in line with the growth of electric vehicles

and battery storage.

SQM said it is moving closer to finalising its

partnership

with state miner Codelco to ramp up lithium extraction in

the Atacama salt flat, with only approval from Chile's

comptroller still pending after China's markets regulator

cleared the deal last month.

Codelco expects the sign-off by year-end, a company

source previously said.