Lithium producers hit by first big downturn of electric vehicle era (updated)

Nano One Materials

13/11/2019 19:52

(Adds SQM comments from industry conference)
    By Ernest Scheyder
    LOS ANGELES, Nov 13 (Reuters) - The burgeoning lithium
industry, which produces the powerhouse metal used to make
electric vehicle (EV) batteries, has entered its first major
downturn, an unwelcome bruising for investors eager to help
combat climate change.
    Albemarle Corp  ALB.N , Tianqi Lithium Corp  002466.SZ  and
others have been producing more lithium than automakers need.
Global supply exceeds demand by about 5%, according to Canaccord
data.  urn:newsml:reuters.com:*:nL2N26N1TI 
    That comes as electric vehicle sales in China - the world's
largest EV market - fell nearly a third in September amid
sliding government subsidies, the third consecutive monthly
decline, according to Jefferies.
    A global average of prices is down more than 50% since the
start of 2018, according to Benchmark Mineral Intelligence, a
metals pricing provider that is hosting an EV supply chain
conference this week in Los Angeles.
    "Current market conditions are challenging," Luke Kissam,
Albemarle's chief executive officer, said last week.
 urn:newsml:reuters.com:*:nL2N27N0XX     
    Despite the weak data, analysts and executives expect a rosy
future when they look out 10 years. 
    Benchmark's Simon Moores called the lithium oversupply an
"air pocket that detracts from the building wall of demand," and
noted much of the excess white metal on the market is so-called
technical grade, or the kind in stopwatches and other small
electronics.
    Battery-grade lithium is used primarily in EV batteries, and
many automakers have high purity standards. Much of the
industry's capacity to produce high-quality, battery-grade
lithium is locked up until 2024, Moores said.
    Chile's SQM  SQMA.SN  sought to downplay the industry
malaise, despite its own plunging profits.  urn:newsml:reuters.com:*:nL2N25I0T7
    "We're not depressed at all," Stefan Debruyne, SQM's
business development director for iodine and lithium, told the
conference on Wednesday. "We're very excited about the future
ahead of us."
    Weather and social unrest are just two of the myriad issues
that have hampered the industry, fueling worries there may not
be enough supply to sate automakers in the future.
    "The future supply of battery-quality chemicals is very much
in doubt," said Joe Lowry, an independent industry analyst, who
wondered how the industry will produce at least 800,000 metric
tons by 2025, more than double current capacity.
    The popularity of future models from Volkswagen AG
 VOWG_p.DE , Tesla and others will ultimately require massive
lithium investments in the billions of dollars, said Chris
Berry, an independent metals analyst.
    But for now, lithium companies have reacted to the price
drop by scaling back spending, a response to nervous investors
pushing the industry to focus more on profitability.

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Game of Mines    https://amers2.apps.cp.thomsonreuters.com/apps/newsservices/mediaProxy?apiKey=28e16fe5-d158-4537-9aac-e3e31f3318df&url=https%3A%2F%2Fgraphics.reuters.com%2FELECTRIC-VEHICLES-METALS%2F010092JB38P%2Findex.html
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 (Reporting by Ernest Scheyder; Editing by David Gregorio and
Tom Brown)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))