S&P revises Albemarle view to negative

S&P said it revised its outlook for Albemarle Corp. to negative from stable and affirmed all its ratings, including the BBB issuer rating.

Lithium prices in the second half of 2023 and into 2024 plunged affecting the company. Lithium pricing over the past 12-18 months, with prices for lithium carbonate equivalent (LCE) ranged from $70 per kilogram(/kg)-$80/kg in the latter half of 2022 to only $10/kg-$15/kg as of the first quarter of 2024.

“Based on these factors, we now believe Albemarle's funds from operations (FFO) to debt will fall to around 20% in 2024 before modestly improving in 2025 but remaining in the 20%-30% range (on an S&P Global Ratings-adjusted weighted average basis). In early 2024, the company moved to preserve its cash, including by implementing cost reductions and cutting back on its previously announced growth capital spending,” S&P said in a press release.

The outlook reflects at least a one-in-three chance of a downgrade over the next two years if lithium pricing does not rebound along with a continued recovery in its demand, the agency said.

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