But you knew that.*
From Yahoo Finance, Nov 6:
Stalling demand for electric vehicles isn't just hitting the automakers that sell them. It's also impacting companies along the supply chain including producers of lithium, the component used to make EV batteries.
Albemarle (ALB), the world's top lithium company, saw its stock tank as much as 7% on Monday after an analyst downgrade from UBS citing falling prices for the soft metal.
UBS analysts lowered their rating to Neutral from Buy and cut their share price target to $140 from $253.
"On UBS reduced EV forecasts, lithium demand growth declines from 30% Y/Y to 22% in 2024, and results in lithium over-supply sooner than expected," wrote analyst Joshua Spector and his team in a note to clients.
Albemarle recently cut its 2023 full-year guidance citing sliding lithium prices as demand in the US and Europe is expected to weaken.
“Our net sales were up 10% in the third quarter versus the same period last year. However, adjusted EBITDA was down due to softer lithium market pricing,” Kent Masters, CEO of Albemarle, said during the company’s latest earnings call.
"While the US and Europe make up only about one-third of total EV production in '23 and '24, near term we see potential challenges for EV growth in those regions related to economic softness and higher interest rates," added Masters.
Shares of lithium technology company Livent (LTHM) are also on a downward trend, down 24% year to date.
"On the demand side, we can see that customer buying activity for lithium in Q3 was weaker than what end market demand indicators would imply," Paul Graves, CEO of Livent, said during the company’s recent earnings call.
Unlike oil, gold, or any other major commodity, lithium is not actively traded on large international exchanges. The material is sold under contracts and the terms aren't generally publicized.
However China's spot market shows lithium prices are down around 50% from its June levels, recently moving below $20,000 per ton. The decline is a sharp contrast from a year ago, when prices for the critical metal coming out of China surpassed $70,000 per ton.
Albemarle says it has price floors on 80% of its contracts, which the company doesn't disclose. Those are intended to protect operations and help limit the downside of falling prices....
