Albemarle: Closing our trading idea
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Albemarle will publish its Q3 earnings report today after market close, which may have a significant impact on the share price in the current uncertain general and lithium market environment. Given this risk, it may be worth closing short-term positions for now and realizing the ~5-6% profit achieved in just over a month on the trading idea. However, we remain optimistic about the long-term outlook for the lithium market, and Albemarle is still on our Equity Top Pick List.
Technical picture
Since breaking the trendline, the price has been unable to move away significantly from the breakout level. With the deterioration of market sentiment, a minor reversal pattern may activate, which could push the price back to ~85 USD. In the long-term, the technical picture for the stock remains favorable, but the short-term pattern indicates a reversal, which increases the likelihood of a deeper backtest.
Fundamental picture
Electric vehicle sales are strong this year: according to Rho Motion research firm, global sales between January-September totaled 14.7 million units globally, representing a 26% increase YoY. China remains the largest player, but European sales are also outstanding (+32% YoY). In addition, the price of lithium has risen from its June lows, but the movement is characterized by significant volatility.
At the company level, Albemarle announced at the end of October that it would sell 51% of one of its business segments (Ketjen), which sells catalyst solutions to petrochemical and oil refining customers (in addition, a 50% stake in a JV owned by Ketjen with a similar business profile, will also be sold). The transaction is expected to close in H1 2026, and Albemarle will receive 660 million USD in cash (pre-tax), which will be used to reduce debt and increase liquidity.
For comparison, in H1 this year, the Ketjen business segment accounted for ~11% of group-level EBITDA (so EBITDA could decline by 5-6% with the sale). This is a significant amount, but not a huge item compared to the EBITDA generated by lithium and bromine production.
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