Albemarle Corporation (NYSE: ALB) will hold more lithium auctions to help boost price transparency and teach people about the market.
On Tuesday, an Albemarle executive said the company decided to hold more auctions to clarify specifics about the market, including how lithium is priced.
“What we’re trying to do is build trust,” Eric Norris, head of Albemarle’s energy storage business, said.
Lithium’s surge in popularity over the past decade has been marred by confusing futures pricing from market leader China, making it difficult to establish a realistic global reference point for its price.
This issue became particularly acute after Chinese prices plunged last year. This dragged down shares of Albemarle and other western lithium producers. The London Metal Exchange has not yet launched its long-planned lithium futures contract, and volumes on the CME Group remain low.
In response to the price uncertainty, Albemarle auctioned some of its Australian lithium supplies in March. It also plans to replicate this practice globally, according to Norris.
Norris also said that Albemarle intends to do more auctions in different parts of the world for various types of lithium.
Albemarle plans to provide its auction data to Fastmarkets and other pricing agencies to formulate publicly available prices. He noted that many of the company’s long-term contracts are linked to such data.
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Albemarle uses direct lithium extraction tech to grow
The company has charted a course to growth using direct lithium extraction technology in Chile’s Salar de Atacama, but has no intention of expanding to any other lithium projects like many of its rivals have. A few rivals include Chile’s Sociedad Quimica de Minera (SQM) (NYSE: SQM) and Lithium South Development Corporation (TSXV: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ), operating in Argentina.
“We haven’t fully even begun to tap the potential of what we have in the Atacama,” Norris said.
Lithium prices dropped in 2024 due to a combination of oversupply and weakened demand. A surge in lithium production, particularly from China and Australia, outpaced the growth in demand, leading to a surplus in the market.
Additionally, economic uncertainties and reduced consumer spending on electric vehicles and electronics, major drivers of lithium consumption, further pressured prices. This downturn also affected major producers like Albemarle, reflecting the volatility and challenges within the global lithium market.
“There should be bigger players with bigger balance sheets in this space in order to credibly support the growth going forward,” Norris said.
“We’d never rule out acquisitions, but our priority now is internal organic investments.”
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