Why are ASX lithium shares pulverising most of the market on Monday?

ASX lithium shares are bolting out of the gate on Monday via some renewed momentum, thereby pulling far ahead of their sector and the broader market.

Many lithium players in Australia are doing extremely well today. Here’s a quick glance at the numbers that some are generating right now:

• Pilbara Minerals Ltd (ASX: PLS) +5.13%
• Core Lithium Ltd (ASX: CXO) +4.10%
• Lake Resources N.L. (ASX: LKE) +5.58%

It should be noted that these share price movements are despite the materials sector being the second-worst-performing sector on Monday. The S&P/ASX 200 Materials Index (ASX: XMJ) is up 0.41%.

And the market as a whole is enjoying a day in the green with the S&P/ASX 200 Index (ASX: XJO) showing a 0.83% gain.

There are more than a few reasons for investors to be feeling optimistic about ASX lithium shares thanks to a mixture of strong commodity prices, positive news stories, and glowing quarterly reports posted to the market recently. Let’s investigate.

Two ASX lithium shares post strong quarterly results

There are strong quarterly reports from the likes of Core Lithium Ltd (ASX: CXO) to help lithium shares beat the market this afternoon. The company said it expected its maiden spodumene concentrate production to be realised in the first half of FY23 and that its spodumene reserve estimates were boosted during the quarter.

Another ASX lithium share that shared good news with the market today was Lake Resources N.L. (ASX: LKE). In its quarterly activities report, Lake Resources stated it signed a new off-take agreement for up to 50,000 tonnes per annum of lithium carbonate and made progress with its lithium brine operations.

What else is going on?

On the demand front, the lithium carbonate contract for difference (CFD) price is hovering around its all-time high at 562500 Chinese yuan per tonne, according to Trading Economics. This CFD price has more than doubled since the start of 2022.

Meanwhile, China’s domestic consumption of lithium inputs could be set to increase further, according to excerpts from a Chinese navy study published by the South China Morning Post on Saturday.

China is reportedly replacing its lead-acid batteries with lithium-based alternatives, which could “significantly boost a submarine’s survival and combat abilities”, the article said. China has the largest submarine fleet in the world in proportion to its surface vessels.

The post Why are ASX lithium shares pulverising most of the market on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. 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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