Albemarle raised to Neutral at UBS as China mine site closures seen lifting lithium prices

[Lithium abstract concept]
Olemedia/E+ via Getty Images

Albemarle (NYSE:ALB [https://seekingalpha.com/symbol/ALB]) shares are little changed in Tuesday's trading as UBS upgraded the lithium producer to Neutral from Sell with an $89 price target, raised from $62, as the bank said further China supply actions make its lower-for-longer thesis for the company more challenged.

Based on analysis by the UBS China team, analyst Joshua Spector said he now sees a base case for lithium prices rising more than 20% Y/Y in 2026, so with lithium prices potentially moving higher in the near term, and prices either temporarily or structurally higher than the prior base case, the analyst sees Albemarle's (NYSE:ALB [https://seekingalpha.com/symbol/ALB]) risk/reward as more balanced, with an upward near-term bias.

Spector's base case sees 100K metric tons of estimated net lithium supply loss in 2026 reflecting site closures or reduced production at ~10 different sites in China, offset by some incremental supply elsewhere, which he said would move 2026 closer to a balanced position instead of his previous outlook for ~6% oversupply and support prices closer to the higher end range of the cost curve of $12-$13/kg, compared to prior guidance of ~$10/kg.

Spector said he now sees Albemarle (ALB [https://seekingalpha.com/symbol/ALB]) generating $200M-$300M in free cash flow/year before preferred and base dividends, an improvement from his prior view of roughly breakeven and negative after combined dividend payments.

MORE ON ALBEMARLE

* Why Albemarle Is My Top Lithium Stock [https://seekingalpha.com/article/4815197-why-albemarle-my-top-lithium-stock]
* Albemarle: Now It's Really Time To Look At Lithium (Rating Upgrade) [https://seekingalpha.com/article/4806099-albemarle-now-its-really-time-to-look-at-lithium-rating-upgrade]
* Albemarle FQ2: Lithium Price May Have Bottomed [https://seekingalpha.com/article/4804933-albemarle-corporation-fq2-lithium-price-may-have-bottomed]