Albemarle’s Plunge to Lowest in Nearly Four Years
Albemarle (NYSE:ALB) found itself at the bottom on Tuesday, marking a dismal -8.7% decline to its lowest point since October 2020, emerging as the biggest loser on the S&P 500. This downward spiral comes amidst a troubling trend in lithium prices.
Two Wall Street analysts exacerbated the situation by slashing their price targets for the beleaguered stock. Baird analyst Ben Kallo, although maintaining an Overweight rating, reduced his price target from $170 to $127. Kallo’s move was spurred by the stagnation of lithium prices, which have consistently lingered at or below Albemarle’s guidance levels, setting the stage for what he believes will be a lackluster Q2 financial report by the company.
Kallo also expressed worry over the potential impact of this year’s U.S. elections on the electric vehicle market, a sphere that plays a critical role in determining the demand for lithium batteries.
Analyst Joshua Spector from UBS, who rates Albemarle (ALB) at Hold, echoed the sentiment by adjusting his price forecast down to $109 from $124, adding to the gloomy outlook.
Other major players in the lithium production industry also witnessed a decline on the same day, with Standard Lithium (SLI) falling by -7.6%, Sigma Lithium (SGML) by -6%, Lithium Americas (LAC) by -4.1%, Arcadium Lithium (ALTM) by -3.5%, and SQM (SQM) by -3%.
Albemarle’s stock has now plummeted more than 70% from its peak in late 2022, a period when lithium commanded a price of approximately $85K per metric ton. In stark contrast, current prices have nosedived to about $12.5K per ton, painting a stark picture of the tumult in the lithium market.
Bleak predictions still loom large as research firm TrendForce issued a somber forecast, indicating a “significant drop” in lithium prices recently, plunging to year-to-date lows. The projection warns of the lingering low demand for lithium into July, foreseeing prices descending to the delicate range of 80K-90K yuan per ton ($11K-$12,375).
The overall industry health is aptly captured by the ETF (LIT) amid the bleak scenario.