Albemarle Corporation saw its shares decline 6.8% on Thursday following the company's decision to immediately idle the remaining processing unit at its Kemerton lithium hydroxide facility in Western Australia. The move was attributed to persistently weak market prices that continue to pressure margins for Western hard-rock lithium conversion operations.
Chief Executive Kent Masters stated that recent modest improvements in lithium pricing were insufficient to support economically viable operations at the site. The Kemerton plant was originally developed to bolster a Western battery-materials supply chain but has struggled to compete with China's dominant refining infrastructure.
This production halt arrives as market participants assess whether recent price increases signal a sustainable recovery or a temporary bounce. Spot pricing in China remains a critical global benchmark, and any slowdown in trading activity there quickly impacts producer financials.
According to Shanghai Metals Market, battery-grade lithium carbonate was assessed at 142,168 yuan per metric ton, with a trading range between 138,000 and 147,000 yuan. The data provider noted transactions were thin due to logistical delays and as downstream buyers had largely completed February stockpiling.
The operational decision followed Albemarle's fourth-quarter earnings report, which revealed a net loss attributable to shareholders of $455.9 million, or $3.87 per share. The company also provided 2026 financial scenarios heavily dependent on lithium prices, projecting net sales between $5.7 billion and $6.0 billion if prices hold near $20 per kilogram, but only $4.1 billion to $4.3 billion if they fall to around $10 per kilogram.
Weakness spread across the lithium sector. Chilean producer SQM fell 5.3%, Lithium Americas declined 4.8%, Sigma Lithium dropped 3.7%, and the Global X Lithium & Battery Tech ETF decreased 2.2%.
Market observers caution that production curtailments alone may not guarantee a sustained price rebound. Demand remains sensitive to electric vehicle sales trends and battery inventory levels, while new supply sources loom. Reuters reported that China's Zijin plans to commence lithium production from the Manono deposit in the Democratic Republic of Congo in June, with exports to follow immediately, potentially adding fresh supply to the market later this year.
