The Philadelphia-based company, among the first major global lithium producers to post results this quarter, said Chinese sales will drop below 20 percent of total revenue in 2019, from 25 percent last year.
"The Chinese consumers of lithium overextended themselves in 2018, built more inventory than they were comfortable with and had a harder time accessing credit," Livent Chief Executive Paul Graves said in an interview.
Shares of the Philadelphia-based company were down 5.8 percent at $12.36 in afternoon trading.
Rivals Albemarle Corp, SQM and Orocobre Ltd - all of which sell into China - are set to post quarterly results in coming weeks.
Livent forecast total lithium carbonate equivalent production of 22,000 to 23,000 tonnes for 2019, in what would be only a small increase from last year despite spiking electric vehicle sales globally.
Livent now plans to export most of the lithium produced by its Chinese processing facilities in 2019, a step that will give it greater access to growing markets for lithium in Japan and South Korea The two are expected to be its two largest markets this year, followed by China.
Livent's China warning came the day after the company posted a quarterly profit in line with Wall Street's expectations.
Graves, who became CEO last year when Livent was spun off from FMC Corp, said the company started to negotiate 2019 contracts late last year and received verbal commitments from Chinese customers on price and volume.
However, when the company went to sign the contracts, the Chinese customers backed away, unwilling to sign deals for either one year or longer-term unless the price was lowered, Graves said.
The trepidation likely is due to a mix of concerns around macroeconomic uncertainty, China's electric vehicle subsidy policy and broader oversupply worries affecting the lithium market, Graves said.
To the detriment of suppliers like Livent, China has been shifting its electric vehicle subsidies from automakers to charging stations and other physical infrastructure, Graves said.
The company said that heavy rains at its Argentina lithium production facility diluted evaporation ponds with more than 80 millimetres (3.2 inches) of water last month, affecting more than 750 tonnes of production.
Livent produces lithium in Argentina and then ships it to China and other places for processing. The company is looking for expansion opportunities to diversify, especially in hard-rock lithium operations typically found in Australia and Canada, Graves said.
"We are under no illusions that being a single-source-of-supply business isn't necessarily a recipe for success," he said.
(Reporting by Ernest Scheyder; editing by Chizu Nomiyama and Steve Orlofsky)
By Ernest Scheyder