Today, let’s talk about the lithium mining giant – $US Albemarle (ALB.US) $ .

This month, the U.S. stock market continued to fall, but thanks to the continued popularity of the lithium mining market, many lithium mining stocks ushered in a surge against the market. Among them, Albemarle in the United States rose by more than 32% in the month, and raised its performance guidance twice in the month, which is eye-catching in the sluggish market.

The focus of this article:

1. What advantages does Albemarle have in lithium ore resources?

2. Why can the sales forecast be continuously raised?

3. How long will the lithium ore market last?

4. What other factors drive Albemarle stock price up?

Raises full-year guidance twice within a month

Founded in 1993 and headquartered in Charlotte, North Carolina, Albemarle is the world’s leading producer of lithium, bromine and catalyst solutions. Among them, lithium contributes the largest proportion of revenue and profits, accounting for about 45% of revenue, and is also a key business development. The global concentration of lithium resources is relatively high, and Albemarle and the other three lithium mining giants (FMC Corporation, Australia Talison and Chile Mining & Chemicals) monopolize about 90% of the production capacity.

The company has the world’s highest quality lithium mines and lithium salt lake resources, namely:

1) Greenbushes Lithium Mine: Holds a 49% stake in Australia’s Talison Lithium, which owns the Greenbushes spodumene mine in Western Australia, which is currently the largest high-grade spodumene mine that has been mined in the world ;

2) Atacama Salt Lake: The Atacama Salt Lake jointly developed with SQM is a lithium salt lake with high lithium concentration, large reserves and mature mining conditions in the world;

In addition, Albemarle has battery-grade lithium production plants in Europe, Australia, China, Chile and the United States.

At the same time, due to the tight supply of lithium mines and the continuous growth of demand for power batteries, Albemarle announced on the evening of May 23 that it raised its 2022 performance guidance again this month, and it is expected that this year’s annual sales will reach 5.8 billion to 6.2 billion US dollars, It was previously expected to be between $5.2 billion and $5.6 billion.

In addition, Albemarle raised its annual adjusted profit forecast to between $12.3 and $15 per share from $9.25 to $12.25 per share. In the first quarter of 2022, the company’s adjusted profit was $2.38 per share, beating analysts’ expectations of $1.63 per share.

“Over the past 12 months, we have made significant progress in renegotiating more flexible pricing contracts with our lithium customers,” said Albemarle Chief Executive Officer Kent Masters. “The implementation of these contracts is a key driver of our year-over-year improvement in our financial performance expectations. “

Not long ago, on the 4th of this month, when Albemarle released its first-quarter financial report, it had already raised its full-year sales forecast. At that time, the stock price was stimulated by the good news and rose for three consecutive days, an increase of about 23%. This time, the company’s median sales forecast for the full year has been raised by about 11% from the forecast at the beginning of the month.

Albemarle is also a constituent of Dividend Aristocrats (BK2650.US) , which has raised its annual dividend for 28 consecutive years.

The lithium ore market continues to be hot

Demand for electric vehicles and batteries has pushed up the price of the battery metal for the past two years, even raising concerns about shortages of materials such as lithium, cobalt and nickel. Lithium supplies are of particular concern because there are no alternatives to lithium in electric vehicle batteries. An index measuring lithium prices continued to more than double in the first four months of this year after surging 280% last year.

On May 24, Australian lithium miner Pilbara (Pilbara) held the second lithium concentrate auction this year and the fifth in history on the BMX platform. The auction transaction price was US$5,955/ton, totaling 5,000 tons.

The sale price was a slight increase of $300 from the previous auction. The previous four auctions have also reached new highs: July 30, 21, $1,250/ton, 10,000 tons; September 13, 21, $2,240/ton, 8,000 tons; October 26, 21 , 2350 US dollars / ton, 10 thousand tons; April 27, 22, 5650 US dollars / ton, 5000 tons.

Pilbara’s lithium concentrate auction has always been the vane of the global lithium concentrate price trend. Some institutions pointed out that the assessed price of lithium concentrate has exceeded the US$6,000 mark. The tight supply trend of lithium concentrate remains unchanged, becoming the core link restricting the growth of lithium supply.

As the core raw material for the global shift to new energy vehicles, the market also expects the price of Australian lithium concentrate to rise further in Q3.

Recently, the lithium mining industry has not changed its hot trend. On the morning of May 21st, the 54.3% equity auction of Snowway Mining, which has attracted much attention, lasted for 5 days and 5 nights, and finally dropped the hammer at a high price of over 2 billion yuan, which was nearly 600 times higher than the starting price. A rare auction record in the industry.

In addition, as lithium prices continue to raise production costs, companies in the upper, middle and lower reaches of the new energy industry are scrambling to deploy lithium mines. In early April, Musk said on social media that Tesla may go out to mine lithium himself because “the price of lithium has reached crazy levels.” And its supplier, lithium battery giant Ningde Times, also successfully bid for the largest lithium exploration right in Yichun, Jiangxi with an offer of 865 million yuan last month.

Analysts are generally optimistic

More than two-thirds of the 15 Wall Street analysts have a “buy” rating, with an average price target of $279.73, which is close to 10 percent upside from yesterday’s closing price of $255.05.

Most analysts gave bullish views after Albemarle raised sales guidance. Analysts at Wells Fargo raised their price target to $320 from $285 to reflect higher lithium prices. The bank believes that the current lithium market demand is strong, and the major downside risks mentioned in the company’s guidance are unlikely to occur.

This article is reprinted from: https://news.futunn.com/post/15904838?src=3&report_type=market&report_id=206790&futusource=news_headline_list
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