Livent 'reviews expansion plans' on falling lithium prices, lowers revenue guidance

North American lithium producer Livent has revised down its financial guidance for fourth-quarter as well as full-year revenues, and is reviewing potential changes to its planned capacity expansion road map, it said on Tuesday January 7.

Livent reduced its expected fourth-quarter revenue to $75-80 million from $90-100 million and its full-year revenue to $385-390 million from $400-410 million. The company blamed the latest revision on lower-than-forecast realized prices for lithium and reduced lithium hydroxide sales volumes due to delayed customer orders over the periods.
Lamenting a bearish environment for prices, the company said it is “reviewing” its expansion plans.
"Current market conditions remain challenging, with lower prices seen across all regions and most end markets," Paul Graves, president and chief executive officer of Livent, said. "While we remain committed to our long-term strategy, in light of these market conditions we are reviewing our current capacity expansion plans."
Livent gave no details on the extent of the review in its latest announcement, but it could relate to planned changes to the output expansion at its Fenix operation.
Livent operates the Fenix site in Argentina, where it was due to produce 17,000-18,000 tonnes lithium carbonate in 2019.
The company had said it was planning to invest in debottlenecking production at Fenix, and had set out a plan to add 9,500 tonnes per year of lithium carbonate to each stage of production expansion over some four years. The first stage was due to be completed by the end of 2020.
Lower 2020 prices
Livent estimates its lithium hydroxide sales prices in 2020 will fall year on year by "a low-to-mid-teens percentage", while the company will maintain plans to purchase up to 7,000 tonnes of third-party lithium carbonate to support higher hydroxide sales volumes.
Fastmarkets assessed the lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, exw domestic China, spot price at 52,000-57,000 yuan ($7,484-8,204) per tonne on January 2, 2020, unchanged from the previous week but down from 99,000-109,000 yuan per tonne at the start of 2019. The price averaged 55,461.54-60,923.08 yuan per tonne in the fourth quarter 2019, compared with 106,923.08-117,307.69 yuan per tonne in the fourth quarter 2018.
Meanwhile, the assessment for lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price, cif China, Japan & Korea has moved down by 32.8% year on year to $10-11.50 per kg on January 2 this year, from $15-17 per kg on January 3, 2019. The price has fallen to an average of $10.69-12.50 per kg in the fourth quarter of 2019 from $15.77-17.77 per kg in the same period a year ago.
Global demand for lithium hydroxide is expected to increase in the coming years, coinciding with the trend for the development of high performance batteries and vehicles with longer driving range. But lithium hydroxide prices have been on a downward trend in due to continued unimproved demand and oversupply in the market. The Asian seaborne market has also been affected with most buyers increasing efforts to push down prices in new contracts for 2020.

Carrie Shi

Carrie.shi@fastmarkets.com

Published

Carrie Shi

January 08, 2020

13:36 GMT

Beijing