Lithium: Albemarle and Livent highlight continued lithium market weakness in Q2 2020

Mt Cattlin, Galaxy Resources

Quarterly earnings calls by Albemarle and Livent both reported plans to limit lithium production in 2020 as a result of market oversupply and weak demand.

Albemarle announced the idling of production at the Kings Mountain facility and Silver Peak brine operation in the USA in response to weak orders for technical-grade lithium products disrupted by the COVID-19 pandemic. The idling of both Kings Mountain and Silver Peak is expected to reduce production in 2020 by roughly 1.7kt LCE, comparative to 4 months’ production. Albemarle also announced a delay to the La Negra phase 3-4 expansions in Chile and the commissioning of its Kemerton plant in Australia in order to reduce capital expenditure.

Conversely, Livent has not reported any site closures across its facilities and expects lithium carbonate and chloride production to remain flat y-on-y in 2020, though lithium hydroxide production is expected to be down.

Roskill View

Global economic weakness during 2020, highlighted by both Albemarle and Livent, has had a significant impact on lithium demand, slowing and delaying the recovery expected by many producers. In Roskill’s market outlook to 2030 report, refined lithium demand is forecast to exceed 305kt LCE, a y-on-y increase of roughly 2.5%, though demand from key industrial sectors such as ceramics and glass is expected to fall by over 30%.

Weaker than expected demand has also led to the build-up of stocks throughout the supply chain, with Albemarle stating stocks for battery-grade materials were in excess of 5 months’ consumption. The build-up of stocks throughout the supply chain is maintaining downward pressure on lithium spot and contract prices.

Despite the existence of significant stocks and weak lithium prices, lithium demand from the battery market has continued to show strong growth. Roskill forecasts demand from battery applications to drive lithium demand to in excess of 1.0Mt LCE by 2026, which is expected to outpace the drawing down of stocks and expansions at existing producers.

Roskill’s NEW Lithium: Outlook to 2030, 17th Edition report was published in August 2020 and includes full analysis of the impact of COVID-19 on supply, demand and prices, as well as profiles of the main producers. Click here to download the brochure and sample pages for the report, or to access further information.

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