Lithium Giants Earnings Downgrades: What is Behind Lithium Price Plunge?
$Albemarle(ALB.US$ is the latest victim of a weak lithium pricing environment. Despite higher volumes leading to a 10.5% rise in net sales to US$2.31 billion, its net income dropped 66.3% YoY to US$302.5 million.
The company also trimmed its net sales forecast for the year from US$10.4 billion to US$11.5 billion to a range of US$9.5 billion to US$9.8 billion.
Most of that has come as EV sales growth in China has trailed lithium supply growth with rising production from Western Australia's spodumene suppliers, Chinese-linked lepidolite mines in Africa, and domestic lepidolite mines in China.
Albemarle recognizes this trend but remains eager to expand its production capacity, as they predict a shortage later in the decade when demand for lithium carbonate equivalent is expected to increase up to five times its 2022 levels.
Chinese lithium giant $GANFENG LITHIUM GROUP CO LTD(GNENF.US$ was hit even harder, with profits falling almost 96% to around US$30.5 million.
In fact of chilling prospects, Albemarle argued that global EV demand growth is on-track amid weaker sentiment, and downstream inventories has drawn to historic lows.
What is behind the weakness in lithium chemicals?
Benchmark Lithium Price Index fell 4% in the period between October 18 and November 1, and is down 65% year to date, according to Benchmark Mineral Intelligence.
Lithium chemicals carbonate and hydroxide were off 62.9% and 68.1%, respectively, the latter's larger fall down to weaker nickel-cobalt-manganese (NCM) cathode battery demand.
That weakness has been seen in the China market, where lithium hydroxide prices have fallen as low as US$19,925/t, and elsewhere, with Asian prices falling 2.2% to US$22,500/t.
Weaker high nickel cathode chemistry demand was also observed in the seaborne Asia market. Contacts reported expectations of lackluster spot demand for hydroxide for the remainder of 2023," Benchmark said.
This is due to the fact that some cathode makers do not plan to increase high nickel NCM production in the near term, and have sufficient lithium chemicals volumes set to be delivered under contract to meet their demand."
Meanwhile, spodumene (6% Li2O concentrate) sold from Western Australia saw spot prices fall 5.8% over the fortnight to US$2450/t, and there are indications prices could go lower.
Despite trades recorded at $2,100/tonne at the low end of the range, Benchmark heard offers as low as $1,800/tonne during the assessment period," its analysts say.
This could serve as an early indicator of the direction of spodumene prices in the near term, aligning with the trend of declining lithium chemicals prices in the chemicals spot market in Asia."
Mooers, will lithium prices rebound on recovery in demand for EV batteries?
Source: Stockhead, Reuters
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SpyderCall : very good insight in here