What if Chile escalates its lithium royalty on producers?
A new margin levy on Chilean lithium producers is a cost/supply shock to SQM and lithium, not a positive industrial-demand impulse — the current roots wrongly lift copper. Tighter producer economics support lithium prices but dent SQM equity and CLP sentiment. Rhymes with Chile's 2023 lithium-nationalization announcement that hit SQM. China (battery supply chain) is the key buyer; the levy raises ex-China cathode costs at the margin.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a mixed shock. Chile escalates its lithium royalty with a new margin levy on producers, denting SQM equity and Chilean peso sentiment. The trigger decomposes into signed root‑shocks — Climate/crop supply ▲ · Industrial demand ▼ · Credit spreads ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Wheat WHEATon Hyperliquid 📈 chart | Commodity | ▲ +0.4% hist -0.39–+1.34% · other way -1.98% (n=10) |
| 2 | Corn CORNon Hyperliquid 📈 chart | Commodity | ▲ +0.3% hist -0.37–+0.42% · other way +0.48% (n=10) |
| 3 | Freeport (copper) FCX 📈 chart | Equity | ▼ -0.2% hist -4.04–+0.8% · other way +9.52% (n=10) |
| 4 | High-yield credit HYG 📈 chart | Rate | ▼ -0.2% hist -0.52–+0.11% · other way +1.76% (n=8) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| FCX FCX | SHORT | -3.4% · 5d -1.6% | 69% | 32 | 0.32 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -0.1% · 5d -0.2% | 64% | 11 | 0.25 | · |
| High-yield credit HYG | SHORT | -0.4% · 5d -0.0% | 60% | 30 | 0.16 | ✓ matches cascade |
| Volatility VIX | LONG | +7.3% · 5d +2.3% | 59% | 34 | 0.16 | · |
| 10y yield DGS10 | SHORT | -11bp · 5d -5bp | 54% | 40 | 0.08 | · |
| WHEAT WHEAT | LONG | +1.1% · 5d -1.4% ↺ fades | 53% | 32 | 0.06 | ✓ matches cascade |
| US dollar DXY | LONG | +0.4% · 5d +0.2% | 51% | 40 | 0.01 | · |
| CORN CORN | SHORT | -0.6% · 5d -0.4% | 50% | 32 | 0.00 | ⚠ differs |
| Gold XAU | SHORT | -0.1% · 5d -0.1% | 47% | 32 | 0.00 | · |
Why this probability
Chile royalty politics active; a new margin levy over 18mo plausible but contested legislatively. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.