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Albemarle (ALB) Gains on Strong Demand, Capacity Expansion

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Albemarle Corporation (ALB - Free Report) is benefiting from higher lithium prices and volumes, capacity expansion and cost-saving actions.

Albemarle, which is a prominent player in the chemicals space along with Eastman Chemical Company (EMN - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) , is gaining from higher volumes in its lithium business on a recovery in global economic activities. Higher customer demand, new capacity and plant productivity improvements are supporting volumes. The La Negra III/IV expansion in Chile is also contributing to higher volumes.

Strong lithium prices are also supporting ALB’s performance. Tight supply conditions and growing demand for electric vehicles are driving lithium prices. The company’s bromine business is also gaining from strong demand and favorable pricing led by tight market conditions. Albemarle is seeing strong demand for flame retardants.

Albemarle raised its net sales outlook for 2022 factoring in continued strength in pricing in its Lithium and Bromine businesses. The company envisions net sales for 2022 to be in the band of $7.1-$7.5 billion, up from $5.8-$6.2 billion expected earlier. Adjusted EBITDA for the year is now forecast to be $3.2-$3.5 billion, up from the prior view of $2.2-$2.5 billion. Albemarle also sees adjusted earnings per share for 2022 in the band of $19.25-$22.25, up from $12.30-$15.00 it expected earlier.

The company is also strategically executing its projects aimed at boosting its global lithium conversion capacity. It remains focused on investing in high-return projects to drive productivity. The company is well placed to gain from long-term growth in the battery-grade lithium market.

Albemarle's Kemerton I lithium hydroxide conversion plant in Western Australia achieved first product in July 2022. Mechanical completion of the Kemerton II plant is expected in second-half 2022. The company is also expanding lithium carbonate production at its Silver Peak site. The acquisition of the Qinzhou plant in China will also boost the growth of conversion capacity and drive lithium volumes.

The company is also benefiting from cost-saving and productivity initiatives. Its cost actions are expected to support its margins in 2022.

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