China Is Whipsawing the EV Battery Industry. This Time Albemarle Stock Plummets.

China’s efforts to control lithium prices have created volatility in shares of Albemarle and other miners. (Logan Cyrus/Bloomberg)

Albemarle stock has been whipsawed in recent months by Chinese policy aimed at managing capacity to control commodity prices. It happened again on Tuesday, sending the shares lower.

Shares of the lithium producer fell 12%, closing at $72.58, while the S&P 500 and Dow Jones Industrial Average rose 0.3% and 0.4%, respectively.

The drop follows a report from FactSet that Chinese electric-vehicle-battery maker Contemporary Amperex Technology Co. Ltd., better known as CATL, will restart its Yichun lithium mine. CATL didn’t immediately respond to a request for comment.

More mine production means more supply and lower prices for lithium, a key component of EV batteries, which is bad for any commodity producer’s earnings.

News on Aug. 11 that the CATL mine, which represents roughly 8% of global lithium supply, was pausing production sent lithium prices up, catalyzing a rally in shares of lithium producers, including Sociedad Quimica y Minera De Chile (or SQM) and Ganfeng Lithium. Albemarle stock was below $60 a share a few weeks ago. It traded above $87 in late August.

Wall Street, including analysts from Citi, Scotiabank, and Baird, chose to sit on the sidelines, watching the recent rally and warning that capacity would come back online eventually. That appears to be the case, now.

Overall, 31% of analysts covering the company rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Albemarle stock is about $81. Price targets did, however, move up about $5 since July, as benchmark lithium prices rallied.

Tuesday trading continues the volatility trend for Albemarle stock. Over the past 12 months, shares have traded as low as $49.43 and as high as $113.91, as lithium prices have ranged from about $8,500 per metric ton to $12,000.

Lithium prices are currently about $10,500, up about $2,000 from July lows. Lithium prices peaked at about $85,000 in Nov. 2022. Albemarle stock peaked at $334.55 in the same month.

Write to Al Root at allen.root@dowjones.com