Albemarle expects its full-year lithium sales to stay relatively flat in 2021 as its plants remain "effectively sold out" due to volume constraints ahead of capacity expansions planned for 2022, company executives said Nov. 5.
"We are selling all the hydroxide that we can make, so we are sold out this year," Albemarle CFO Scott Tozier said during an earnings call with investors. "We have made the concessions that we talked about on price and the leverage we are getting for that is the volumes this year that we have planned."
Albemarle CEO Kent Masters said work on the company's new capacity in Chile and Australia was slightly delayed earlier in the year due to the coronavirus pandemic, preventing it from coming online before 2022 to meet potential demand increases in 2021.
"We're on our plan to bring that capacity on, but the likely demand will pick up before we have that capacity, so we will lose a little [market] share," Masters said. "We expect that. That will move back to us as we get that capacity on as the market continues to grow out into the future."
Construction on Albemarle's La Negra lithium carbonate plant expansion in Chile and new Kemerton lithium hydroxide facility in Australia is set to be completed by the end of 2021.
Kemerton will have an initial capacity of 50,000 mt/year, and the La Negra expansion will increase the plant's volume to over 80,000 mt/year. Both capacities are measured on a lithium carbonate equivalent basis.
Masters said it would be difficult to build and store inventory ahead of time in order to cover possible demand increases in 2021, especially for lithium hydroxide due to its shelf life.
"You want to be careful about how you manage those inventories, and we'll work through those inventories to next year," Masters said. "We'll sell more than we'll be able to make, but we're limited by the life of hydroxide, and that's where that extra demand comes from."
In the lithium hydroxide market, Masters said prices could move up next year if supply gets tight as demand rises.
Albemarle's lithium sales in the third quarter slid 24% to $265.6 million. The company attributed the drop to lower contract and market pricing that reflected battery-grade price adjustments agreed to in late 2019, according to an earnings statement Nov. 4.
The lithium and specialty chemical producer posted an income of $98 million on sales of $747 million in Q3, falling from a $155 million profit on $880 million in revenue in Q3 2019.
