On 1 August, Albemarle announced Q2 2024 earnings and cost review strategy to adapt to the current challenging situation in the industry. Albemarle reported Q2 sales volumes of 53,000 tons of LCE, achieving net sales of US$830 million with a decrease from US$933 million in the previous quarter.
Regarding the realized price of lithium chemicals, Albemarle said approximately two-thirds of the 2024 estimated volumes are sold under index-referenced, variable-priced contracts typically including a three-month lag. The margins in its lithium chemicals sector are anticipated to reach their lowest point in Q3 but should improve in Q4 as the lower cost of spodumene offsets new facility ramp costs.
The company is initiating a comprehensive review of its cost and operating structure, which includes placing Kemerton Train 2 into care and maintenance and halting construction on Train 3, which consequently leads to a 300-headcount cut in Kemerton. The management says the shift towards carbonate-based batteries, particularly for LFP technology, has been a factor in the Kemerton decision. Now the company will focus on Train 1 for better optimization, ensuring more efficient ramp-up and operation before considering Train 2. According to previous disclosure, each Train in Kemerton can produce approximately 25,000 tons of lithium hydroxide per year.
There are external concerns about whether Albemarle needs new financing instruments, especially given the current challenging market environment. Albemarle's management asserted that the company could weather the downturn using its balance sheet.
Author: Hongqiu Su | Battery Metals Analyst Associate | London Office, Shanghai Metals Market
Email: lilysu@smm.cn
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