Albemarle calms concerns about oversupply, weak Chinese demand
- Albemarle reported better-than-expected quarterly results
Albemarle’s 2019 outlook helps calm investor fears of lower lithium prices from an oversupplied market, James Sheehan, an analyst at Suntrust Robinson Humphrey, said in a note. A 4 percent gain in prices in the fourth quarter, “supports our thesis that Albemarle can maintain stable pricing.”
Albemarle’s stock rose as much as 11 percent, the biggest intraday gain since May 2016. It was the best performer on the S&P 500 Index on Thursday. Santiago-based Soc. Quimica y Minera de Chile SA, the world’s second-largest producer, rose 2.4 percent for a second consecutive gain. Shares of Tianqi Lithium Corp., the third-largest, posted their highest closing price this year.
Charlotte, North Carolina-based Albemarle, which produces about a third of the world’s lithium, expects prices to remain flat or to increase this year. Prices for lithium carbonate, the most common form of the mineral, have fallen from historic highs, but still remain more than double the level of four years ago, according to monthly data by Benchmark Mineral Intelligence.
Global sales of electric vehicles soared 98 percent during the fourth quarter, Albemarle Chief Financial Officer Scott Tozier said Thursday on a conference call with analysts. The number of available plug-in hybrids and battery-electric models announced by automakers for 2021 has grown by almost 40 percent since mid-2017. As a result, demand for lithium carbonate equivalent will be about 475,000 tons by 2021 and 1 million tons by 2025, he said.
Large producers such as Albemarle, SQM and Tianqi will continue to dominate a space that might look oversupplied this year as new capacity comes in, Albemarle Chief Executive Officer Luke Kissam told analysts during the call. With new technologies demanding more lithium, the market will remain tight in coming years, he said.
“The momentum around electric vehicles has continued to accelerate,” Tozier said. “The demand curve has shifted higher and steepened,” he said, referring to lithium.