Lithium producer Albemarle reports a shift to profit and reduces expenditure during an ongoing slump in the lithium market.
Albemarle Navigates Lithium Market Volatility Amidst Global EV Boom
The global electric vehicle (EV) market is experiencing a significant surge, with Europe and China showing double-digit growth. However, the US only accounts for about 10 percent of global EV sales, according to recent data. This shift in demand dynamics has had a profound impact on the lithium market, a key component in EV batteries.
Albemarle, a leading lithium producer, has reported a second-quarter profit of US$22.9 million, a stark contrast to a US$188.2 million loss a year ago. The company's resilience can be attributed to the stronger-than-expected results from its specialties division and disciplined cost management.
Despite the global EV boom and supply constraints in 2021-2022, lithium prices soared above US$70 per kilogram. However, the market entered a lithium surplus by late 2022, causing prices to decline sharply. Currently, lithium prices are near levels not economically viable for many new or greenfield projects.
Albemarle has responded to these market conditions by increasing lithium production volumes (+15% growth noted) but facing price declines (average selling price dropped about 28% in H1 2025). The company is also focusing on strategic initiatives such as tightening contract mixes, reducing capital expenditures, and restructuring to optimize its cost structure and protect margins amidst a dynamic pricing environment.
Despite recent price softness, Albemarle remains confident in the long-term fundamentals of the lithium market. The company expects to achieve positive free cash flow for 2025, provided current lithium prices persist. Albemarle also anticipates the full-year EBITDA margin for energy storage to average in the mid-20 percent range, assuming their $9 per kilogram price scenario.
Looking ahead, the outlook for lithium prices in 2025 indicates continued pressure from a market oversupply, despite sustained growth in demand. Prices are forecasted to be around $11,000–$12,000 per metric ton of lithium carbonate in 2025, with an increase toward $13,000–$13,500 per metric ton expected in 2026. By 2030, prices could rise sharply, potentially reaching $30,000 per metric ton according to some projections.
Demand for lithium is expected to grow strongly, at roughly 12% annually through 2030, driven primarily by EV adoption, renewable energy storage, and digitalization. However, regional demand dynamics are shifting, with China’s share of global lithium demand (currently around 60%) expected to decline as other regions scale production and consumption.
The outlook in North America is less certain, particularly in the United States due to the potential impact of tariffs and the removal of the 30D tax credit in September. Despite these challenges, Albemarle and other lithium producers are leveraging operational improvements and contract management to navigate these headwinds while positioning for future growth.
Sources: 1. Albemarle Reports Second-Quarter 2025 Results 2. Albemarle's Q2 Earnings Beat Estimates, but Lower Prices Hurt Lithium Segment 3. Global Lithium Market Forecast to 2030 4. Albemarle's Lithium Business Faces Challenges Amid Lower Prices 5. Lithium Prices Could Reach $30,000 per Metric Ton by 2030, Analysts Say
In the context of the EV market growth and its impact on the lithium market, Albemarle, a key player in the industry, faces financial challenges as lithium prices have dropped significantly, affecting its energy segment. The company is responding by boosting lithium production but tightening contract mixes, reducing capital expenditures, and optimizing costs to protect margins amidst the volatile pricing environment. (industry, finance, energy)
Despite challenging market conditions, Albemarle anticipates sustained lithium demand growth, particularly due to the rise of EVs, renewable energy storage, and digitalization. However, regional demand dynamics are shifting, and the outlook in North America, particularly the United States, is uncertain due to potential tariffs and the removal of tax credits. (industry, finance, energy)
