November 6, 2019 / 3:05 PM / 14 days ago

Livent CEO sees 'difficult environment' for lithium producers

(Reuters) - The lithium industry is working through “difficult” times due to low prices for the battery metal and global oversupply concerns, though an upswing in demand should help beginning next year, Livent Corp (LTHM.N) Chief Executive Paul Graves said on Wednesday.

FILE PHOTO: The company logo for lithium producer Livent Corp is displayed on a screen at the New York Stock Exchange (NYSE) during the company's IPO in New York, U.S., October 11, 2018. REUTERS/Brendan McDermid

The company, which operates in northern Argentina, late Tuesday cut its full-year revenue and earnings forecast for the second time this year because it will delay selling about a quarter of its annual lithium hydroxide production until 2020.

While Livent and some peers sell much of their lithium on long-term contracts, they have been stung by weakening market sentiment as global supply exceeds demand by 5 percent.

“It’s a difficult environment to do business,” Graves said in an interview.

Despite the uncertainty, Philadelphia-based Livent is working to cement long-term electric vehicle industry partnerships. It is delaying the shipping of 4,000 tonnes of lithium hydroxide until next year to battery makers that will not need the metal until then. Livent produced about 15,936 tonnes of hydroxide in 2018.

That strategy, Graves said, is a bet that by holding high-quality lithium until it is needed, rather than risk not being able to meet demand next year, the company can maintain key relationships.

Livent primarily sells one specific type of the white metal, hydroxide. Albemarle, the world’s largest lithium producer, and others tend to produce both lithium hydroxide and carbonate.

On Tuesday, Livent announced a deal to supply “significant volumes” of lithium to LG Chem Ltd (051910.KS). It did not provide specifics.

Livent has noticed several Chilean peers selling low-quality lithium carbonate into China in order to boost short-term revenue, Graves said, without elaborating. Rivals SQM (SQMA.SN) and Albemarle Corp (ALB.N) are the only lithium producers in Chile.

“A lot of people want to monetize excess inventory right away,” Graves said. “We’re focused on long-term relationships with our customers, understanding what they need this year and next year.”

Albemarle has said it will not participate in the London Metal Exchange’s plan to launch a new lithium contract, depriving the exchange of a key source of pricing data because it believes that lithium is a specialty chemical and not a basic commodity.

Livent, Graves said, is not helping the LME either, though for different reasons: Livent’s customers do not want the data released.

“Lithium consumers do not want to disclose what they are buying,” Graves said. “The price they pay is commercially sensitive.”

Reporting by Ernest Scheyder; Editing by Chizu Nomiyama and Leslie Adler

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