According to reports from Futu Securities, a high-ranking executive at Albemarle issued a warning at an industry conference on Tuesday that the current weak level of lithium prices would not support investment in new lithium factories. Eric Norris, Albemarle's executive in charge of the energy storage business, expressed this view at the Fastmarkets Lithium Supply and Battery Materials Conference in Las Vegas. He emphasized: "The current lithium prices are worrisome, and investors should not invest in lithium facilities at this price level."

Despite concerns about short-term lithium prices, Norris remains optimistic about the long-term prospects for energy transformation. He stressed: "I believe energy transformation is inevitable, and the growth momentum of electric vehicle demand is strong. Our long-term demand forecast for lithium remains strong."

However, after a brief rebound, lithium prices have further declined this month, mainly due to weak demand for electric vehicles and increasing inventory. The spot price of Chinese carbonate lithium has fallen to its lowest level since August 2021, and the most active futures contract on the Guangzhou Exchange has fallen 12% so far this month. In addition, Albemarle's latest auction on June 19 saw a 6.9% drop in the winning bid compared to the previous auction on June 5.

Susan Zou, an analyst at Rystad Energy, pointed out that the increase in lithium production and the expected summer season are putting pressure on prices, and she believes that the momentum for price increases has "essentially disappeared."

Traders revealed that manufacturers have been cutting lithium product orders to cope with slowing growth in electric vehicle demand, and are expected to replenish inventory at lower prices soon. However, some traders believe that there is limited downward space for prices, and the current price decline has already squeezed the profits of some high-cost producers. The lowest contract price in Guangzhou in July suggests that prices may hit bottom in the summer.

Data from Citigroup shows that total inventory of Chinese lithium carbonate has been rising steadily since April. Last week, downstream firms (mainly cathode manufacturers) increased their inventory by 8% compared to the second week, while other users, including battery manufacturers and traders, saw their inventory soar by 32%.

The stock prices of lithium producers are also under pressure. Albemarle's stock price has been affected by market sentiment, falling for 10 consecutive trading days in recent times, down 27% in the past month, and a decline of 37% year-to-date. Lithium Americas (LAC.US), a potential supplier to General Motors, saw its stock price plummet 55% this year, with stock issuances in April sold at a significant discount. Piedmont Lithium (PLL.US), which signed a supply agreement with Tesla, fell 64% during the period of 2021 to 2024.

It is noteworthy that some large companies remain active in trading. Equinor ASA announced in May that it would acquire 45% of the shareholding in two lithium project companies in Arkansas and Texas from Standard Lithium Ltd. In early June, Occidental Petroleum Corporation and a subsidiary of Berkshire Hathaway Energy formed a joint venture to commercialize Occidental Petroleum's technology for extracting and producing lithium compounds from California brine.