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Albemarle Corporation (NYSE:ALB) shares are trading higher on Wednesday. The company reportedly intends to conduct additional auctions for lithium, the metal used in electric vehicle batteries.
This move aims to enhance price transparency and foster a clearer understanding of the typically opaque market, reported Reuters.
The company also expects to strengthen supply contracts with automakers eager for a stable and consistent supply.
As per the report, despite lithium’s surge in popularity over the past decade, confusing futures pricing from market leader China has obscured a clear global reference point for its price.
The issue became particularly pronounced when Chinese prices plummeted last year, causing a decline in the shares of Albemarle and other Western lithium producers.
The London Metal Exchange has yet to roll out its long-anticipated lithium futures contract, and the trading volumes of the lithium contract on the CME Group Inc. (NASDAQ:CME) are considerably smaller than those of copper and other essential minerals.
Albemarle intends to share its auction data with Fastmarkets and other pricing agencies to develop publicly available prices noting that many of the company’s long-term contracts are tied to this data.
Eric Norris, head of Albemarle’s energy storage business, told Reuters, “Our intent is to do more of them in more parts of the world and for various types and grades of lithium”
“With the recent drop in lithium prices, now may be the right time for industry consolidation… There should be bigger players with bigger balance sheets … in this space in order to credibly support the growth going forward,” he added.
Investors can gain exposure to the stock via Sprott Lithium Miners ETF (NASDAQ:LITP) and Global X Lithium & Battery Tech ETF (NYSE:LIT).
Price Action: ALB shares are up 5.3% at $97.72 premarket at last check Wednesday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image created using artificial intelligence via Midjourney.
