Albemarle Stock Rises After Big Pullback. What’s Behind the Lithium Miner’s Volatility?

Lithium is a key component in electric-vehicle batteries. (Cristobal Olivares/Bloomberg)

Key Points

• Albemarle shares edged higher Friday following a 7.4% drop on Thursday that snapped a nine-session winning streak.
• A report says CATL’s Jianxiawo mine, which contributed 8% of global lithium supply, is expected to reopen in early December.
• Albemarle stock has a 90-day beta of 1.91, indicating it is almost twice as volatile as the broader market.

Albemarle stock rose modestly Friday—a rare quiet day for a name that has become a picture of volatility in recent months.

Shares of the lithium miner were up 0.6% on Friday after dropping 7.4% on Thursday, snapping a nine-session winning streak.

Investors in the lithium miner should be pleased with their returns this year: Albemarle stock has gained 33%. But it hasn’t always been the smoothest ride.

Lithium stocks got a bump in August when Chinese battery maker Contemporary Amperex Technology, better known as CATL, halted production at its Jianxiawo mine over licensing issues. The pause helped cause a spike in the price of lithium, a component in electric-vehicle batteries.

But CATL is preparing to reopen the mine as soon as early December, Bloomberg reported Friday, pending approval from Chinese authorities. Prices could fall as supply ticks back up. Before August, Jianxiawo contributed roughly 8% of the global lithium supply.

CATL didn’t immediately respond to Barron’s request for comment.

The whiplash in the lithium industry has extended far beyond just one mine. News that China would require export licenses for certain lithium-ion batteries sent Albemarle stock climbing in October. Demand for energy storage solutions that use lithium-ion batteries also has been on the rise, Citi analyst Jack Shang noted last week, which could boost prices further.

Not to mention, the Department of Energy announced a 5% equity stake in fellow miner Lithium Americas in early October.

The deluge of investments and demand and supply shocks has meant a rollercoaster ride for Albemarle investors. The stock has a beta, a common measure of volatility, of 1.91 over the last 90 days, meaning it has been almost twice as volatile as the broader market. Albemarle’s beta over the last five years, by contrast, is 1.57.

In the last three months alone, the stock has had 16 single-day swings of 5% or more. Thursday was the latest.

Friday may turn out to be a quiet session for Albemarle, but until the picture around supply and demand becomes clearer, shareholders should expect more big swings ahead.

Write to Nate Wolf at nate.wolf@barrons.com