Ouch. This morning has not been fun for shareholders of Rockwood Holdings (ROC), to see shares down 20% on no company news.
The news, however, is that Chilean Mining company Chemical & Mining Co. of Chile (SQM) decided to slash the price of lithium they sell by 20% and to increase production, in a bid to grab market share.
Or, as they put it, to:
"implement a significant reduction of its lithium price levels with the purpose of accelerating demand recovery, creating incentives for research of new lithium uses, and contributing to the sustainable long-term development of the lithium market."
Infuriating for Rockwood is that Chilean Mining is only down 5% -->> because lithium is only 8% of revenues, while lithium was expected to be a big growth driver for Rockwood.
A Credit Suisse analyst cut Rockwood to Neutral from Outperform on the news.
The lithium price cut may be why recent IPO A123 Systems (AONE) is up 10% today. As a lithium-ion battery maker, this price cut will likely speed their time-to-profitability.