Shares of Albemarle (ALB), the world’s largest lithium producer, plummeted on Tuesday as Baird slashed its price target for the stock, citing ongoing pressure from low lithium prices.
Significant Decline in Stock Price
By mid-afternoon trading, Albemarle’s stock had fallen 7.6% to $91.64, marking its lowest level since November 2020. The stock was the biggest decliner on the S&P 500. Baird revised its price target for Albemarle down from $170 to $127, while maintaining an Overweight rating.
Lithium Price Weakness
Baird analyst Ben Kallo pointed out that lithium prices have remained at or below the “bottom end of guidance” of $15 per kilogram throughout the year. This trend is expected to contribute to a weak second quarter for Albemarle, which is scheduled to report its Q2 results on July 31.
TrendForce, a research firm, reported on Monday that lithium prices experienced a significant drop last month, reaching their lowest levels this year as the downstream battery sector focused on reducing inventory. The report predicts that demand for lithium will remain low in July, with prices falling to a “sensitive range” of 80,000 to 90,000 Chinese yuan ($11,000 to $12,375) per ton. Despite some supply-side contraction, overall supply is expected to exceed demand, maintaining the downward price trend.
U.S. Election Impact on EV Market
Kallo also highlighted concerns regarding the potential impact of this year’s U.S. elections on the electric vehicle (EV) market, which directly influences lithium battery demand. He anticipates volatility leading up to the election, with vehicle manufacturers possibly delaying production or setting more stringent transition targets as they await clarity on potential changes to government EV tax credits.
