The latest financial report of Albemarle shows that its cumulative revenue for the first six months of the fiscal year 2024 was $2.791 billion, a decrease of 43.62% compared to the same period last year; the cumulative net loss for the first six months was $160 million, compared to a net profit of $1.953 billion for the same period last year.
Subsequently, Albemarle announced that it had to cut expenses and proactively suspended its expansion plans in Australia. Albemarle stated that it has begun a comprehensive assessment of its costs and operational structure, which will include halting the construction of a lithium hydroxide production line at its Kemerton plant in Australia (Stop construction activities at Train 3) and performing "maintenance and upkeep" on another production line locally (Idle production at Train 2 and place the unit in care and maintenance). Due to the idleness of the production line, the plant's production capacity will be reduced from the current 50,000 tons to 25,000 tons (Focus manufacturing efforts on the continued ramp and qualification of Train 1).
Albemarle's Kemerton expansion plant
The price of lithium concentrate has fallen significantly, from a high of $4,150 per ton to $1,060 per ton. Looking at 2023, lithium prices were generally volatile, even experiencing a brief rebound in the middle of the year. However, in the fourth quarter, lithium carbonate prices continued to decline. The prices of lithium salts such as lithium carbonate have slid from over 500,000 yuan per ton at the beginning of the year to 100,000 yuan per ton by the end of the year, with a significant drop of 65% in the whole year of 2023.
After entering 2024, lithium carbonate prices have continued to weaken this year. Since June 2024, lithium carbonate prices have fallen for two consecutive months. The current spot price has even broken the cost line of 80,000 yuan per ton, reporting 79,500 yuan per ton; the main futures contract for lithium carbonate also broke through the 80,000 mark today, reporting 79,600 yuan per ton, setting a new historical low.
Under the relatively high lithium prices, Albemarle's net profit attributable to the parent company for the first three quarters of 2023 were 1.339 billion yuan, 650 million yuan, and 303 million yuan, respectively. However, as lithium prices hit rock bottom, Albemarle suffered a loss of $617.7 million in the fourth quarter, a decrease of $1.8 billion compared to the same period the previous year.
Under the dual pressures of falling lithium carbonate prices and great decrease of company profit, Albemarle has also adjusted its investment plans several times.
In October 2023, Albemarle issued a statement saying that it officially withdrew its non-binding acquisition offer for the Australian lithium mine developer Liontown, stating that it was not in Albemarle's best interest to proceed with the acquisition at this time.
In January 2024, Albemarle said it would postpone spending on a refining plant project in the United States, which is part of the company's broad cost-cutting plan, while also selling its shares in the Australian mining company Liontown.
Albemarle also stated that its capital expenditure plan for 2024 is between $1.6 billion and $1.8 billion, lower than the approximately $2.1 billion in 2023.
The main factor affecting lithium carbonate prices is oversupply.
From the supply side, after entering June of this year, with the rise in temperature, the operation rate of salt lakes gradually increased, and the operation rate of ore smelting lithium carbonate remained stable, with production showing a trend of steady increase. In addition, the import of lithium carbonate in China continued to rise, and the import price of lithium ore also continued to fall, and the prices of spodumene and lepidolite concentrates also showed a downward trend, further reducing the cost price. Although some companies have adjusted their production capacity, the overall impact is limited, and lithium carbonate prices have not yet forced the production capacity of the mine to clear out.
While supply continues to increase, demand has not shown a significant improvement. The current actual demand is still not enough to digest the high inventory, and there is no significant sequential increase in market demand. In the short term, the basic situation is still strong supply and weak demand, and lithium carbonate prices are difficult to get effective support.
Obviously, with the continuous influx of imported resources and the off-season of terminal demand, lithium carbonate prices will still linger at a low level without improvement in the basic situation.
However, according to statistics from the China Battery Industry, the current fluctuations have a limited impact on companies. On the one hand, while companies hold spot goods, they can compensate for the losses brought by the decline in spot market prices through hedging. On the other hand, companies in the industry are also strengthening cost control and extending upstream and downstream in the industrial chain to reduce the impact of lithium carbonate price fluctuations on profits.
