(Adds quarterly figures, quotes, background)
SANTIAGO, Oct 27 (Reuters) - Chile's giant fertilizer producer, SQM (SQM.N)SQMa.SNSQM_pb.SN, said on Tuesday its net profit fell 57 percent in the third quarter from a year earlier, but it believes sagging demand has begun to gradually recover.
SQM's net profit totaled $82.3 million in the quarter compared with $190.6 million last year.
The company attributed the sharp drop in earnings to the high base of comparison last year when third-quarter profit surged to an all-time high. It said the quarterly net profit this year was "the second highest third-quarter earnings reported" and 98 percent above the same quarter in 2007.
"We believe the markets have bottomed out across all of our business lines and are beginning to turn around," Chief Executive Patricio Contesse said in a statement.
"The recovery process is slow and will most likely remain slow in the following year," he said.
SQM, the world's biggest producer of iodine and lithium, had revenues of $383.5 million in the third quarter, down from $589.1 million a year ago.
In the January-September period net profit fell 34 percent to $251.7 million from $381.1 million in the same nine-month period of 2008.
Earlier in the day JP Morgan downgraded its recommendation for SQM stocks from neutral to below market average. The stock fell 3.5 percent to 19,871 pesos on Tuesday.
Writing by Aaron Nelsen; Editing by Richard Chang