(Adds comments on demand, background)
Aug 8 (Reuters) - Albemarle Corp said on Thursday it would delay construction plans for about 125,000 tons of additional lithium processing capacity as an oversupply of the white metal used to make electric vehicle batteries has pushed down prices.
The move from the world's top lithium producer is happening as trade tensions between the U.S. and China rattle commodity markets, particularly Lithium, which has been especially weak because of lower demand from China after a change in the country's electric vehicle subsidies.
Albemarle said it expects lithium supply-demand dynamics to tighten in 2020, adding that it would add production capacity to meet demand.
"We're still bullish on demand," Chief Executive Officer Luke Kissam said on a post-earnings call, while the head of the lithium unit said he expects demand to "step up again in 2020 to a greater degree."
In the meantime, Albemarle said the move would lower capital expenses by about $1.5 billion over the next five years. It expects to become free cash flow positive in 2021.
The company last week revised a deal to buy into Australia's Mineral Resources Ltd's Wodgina mine to cut spending on the deal and put on hold plans to build a 100,000 tonnes a year lithium hydroxide plant at Wodgina.
The company also expects to delay building 75,000 tonnes of processing capacity at Kemerton in Australia. (Reporting by Arathy S Nair in Bengaluru; Editing by Anil D'Silva, Bernard Orr)