LONDON, June 24 (Reuters) – Albemarle Corp., the world’s largest lithium producer, is not impressed by the London Metal Exchange’s (LME) plans to launch a lithium contract.
“An exchange contract tends to support a commodity market, and that’s not what we believe this (lithium market) is,” David Ryan, the company’s head of corporate strategy and investor relations, told an industry conference in Chile earlier this month.
The conference was hosted by Fastmarkets, which has been chosen by the LME to provide the reference price for the new contract, but Albemarle won’t be contributing, for now at least. It and other established producers believe that lithium is a specialty chemicals market and should be priced on a contract-by-contract basis.
At a chemical composition level that may well be right, but in terms of pricing, lithium is conforming perfectly to the boom-and-bust pattern of a classic commodity market. The challenge for the lithium industry is how to live with such volatility.
FROM BOOM TO BUST
The lithium market has lost much of its previous heat over the last year or so. Chinese spot lithium carbonate prices, as assessed by Fastmarkets, have collapsed from a peak of $26.23 per kilogram in November 2017 to $10.93 last month.