Albemarle: Closing our trading idea
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After a hot fall, a spring tornado could wreak havoc in France
Barely half a year after this year’s French budget was passed, the wrangling over the 2027 budget is about to begin, but that’s not all, because France will also hold a presidential election next spring. During the first public presidential debate, some of the radical candidates put forward ideas that were, at times, unconventional. Although the presidential election in late April still seems far off, based on the latest polls, if no candidate secures enough votes and a runoff is held, it cannot be ruled out that two radical presidential candidates will face off against each other. Market participants may have begun to price in this growing uncertainty, as the yield spread between French and German 10-year government bonds has started to widen again in recent weeks. The period ahead promises to be full of twists and turns, so it will be worth keeping a close eye on developments in French domestic politics.
Commodities - Technical Analysis
Gold and silver prices have retested their uptrend lines, so the long-term trend may continue. Oil prices have broken out of a contracting pattern, which may signal the start of another upward wave. Natural gas prices have also begun to rise, signaling a buy. In the case of copper, the main uptrend remains in effect, and there are currently no signs indicating a change in the trend’s structure. Following significant gains, wheat and corn have become heavily overbought, increasing the likelihood of a correction.
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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