Low charge: is the party over for ASX lithium stocks?

A group of young friends are supposed to be having a rooftop party but the lights have dimmed, the energy is low, and it's a bit of a downer.A group of young friends are supposed to be having a rooftop party but the lights have dimmed, the energy is low, and it's a bit of a downer.

ASX lithium stocks have had a wild ride in the past few years. The sector has seen enormous gains as investors piled in, expecting a shortage in supply to drive up prices.

However, we have seen many of these companies experience significant share price weakness over the past month.

So, is this the beginning of the end for ASX lithium stocks? Or is there still room for them to run higher?

Foot slips off the gas of ASX lithium shares

If there is one thematic that has dominated markets in recent history, it is the growing demand for lithium. The proliferation of electric vehicles (EVs) jump-started the lithium price in 2021, continuing into this year.

From the beginning of 2020 to the peak of this year, the price of lithium carbonate has exploded — increasing from ~US$6,600 per tonne to ~US$74,200 per tonne. Although, investors speculating on further price rises coinciding with demand have faced sobering insight recently.

As my colleague James covered last week, Goldman Sachs analysts have suggested that the highest prices for the electrifying commodity might be behind us. In a note, the investment bank disclosed its expectation for a long-run average price of US$11,500 per tonne.

The forecast comes at a time when lithium prices have been retracing over the last 30 days — pulling back by roughly 7%. In response, ASX lithium stocks have also seen their value depleted during this time, including:

  • Lake Resources N.L. (ASX: LKE) down 23.6% to $1.48
  • Liontown Resources Limited (ASX: LTR) down 23% to $1.26
  • Allkem Ltd (ASX: AKE) down 10.6% to $11.34
  • Pilbara Minerals Ltd (ASX: PLS) down 15.3% to $2.55

One lithium company is flipping the script

Beyond the bounds of the Australian share market, there is a lithium share that has been able to push higher despite the souring sentiment.

The share price of US-based Albemarle Corporation (NYSE: ALB) is up 17.7% over the last month. Most of this strength followed the company’s first-quarter earnings result for FY22. Pleasingly, Albemarle surpassed analyst expectations with a 44% earnings per share (EPS) beat.

In comparison, Pilbara Minerals is one ASX lithium stock that failed to rally upon its latest quarterly report. The company revealed slightly lower spodumene concentrate production and a significant fall in shipment volume.

The post Low charge: is the party over for ASX lithium stocks? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler owns shares in Albemarle Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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