S&P/ASX 200 Index (ASX: XJO) lithium shares were all in the green following the first three trading days of the week.

As at Wednesday’s closing bell, here’s how the big lithium stocks had fared for the week:

• Core Lithium Ltd (ASX: CXO) shares were up 0.7%
• Allkem Ltd (ASX: AKE) shares were up 1.5%
• Pilbara Minerals Ltd (ASX: PLS) shares were up 1.4%
• IGO Ltd (ASX: IGO) shares were up 1.5%

Then Thursday rolled in. And those gains evaporated.

Why have ASX 200 lithium shares been falling for two days?

All of the big lithium stocks closed in the red yesterday.

And today those losses are mounting.

Here’s how ASX 200 lithium shares are currently tracking since the opening bell on Monday:

• Core Lithium Ltd (ASX: CXO) shares are down 5.8%
• Allkem Ltd (ASX: AKE) shares have lost 6.7%
• Pilbara Minerals Ltd (ASX: PLS) shares are down 8.0%
• IGO Ltd (ASX: IGO) shares have lost 4.7%

The retrace looks to be linked to a massive spike in COVID infections in China, with infections in the world’s most populous nation reaching all-time highs.

China, also the world’s number two economy is a global leader in EV production. Hence the nation has a voracious appetite for lithium, a critical element in most EV and grid storage batteries.

While Chinese authorities have yet to issue new sweeping lockdown orders, increasing restrictions this week are dampening hopes that China’s economy will come roaring back anytime soon.

That, in turn, looks to be working into investor expectations of near-term lithium demand, and throwing up headwinds for ASX 200 lithium shares.

But don’t feel too bad for shareholders just yet.

How have the big lithium stocks performed over the year?

Over the past 12 months, all ASX 200 lithium shares have smashed the benchmark returns.

Since this time last year, the ASX 200 is down 2%.

Over that same time, Allkem shares are up 38%; IGO shares have gained 44%; Pilbara shares are up 73%; and the Core Lithium share price has surged 143%.

The post Here’s why ASX 200 lithium shares are ending the week with a fizzle appeared first on The Motley Fool Australia.

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More reading

• If I’d bought $5,000 of Core Lithium shares at the start of this financial year, guess how much I’d have now?
• 3 ASX 200 shares analysts are tipping for stellar growth
• Three comforting lessons for investors whose portfolio has been smashed versus the surprisingly good return of the ASX 200
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• What $10,000 in ASX lithium shares a year ago would be worth today

Motley Fool contributor Bernd Struben 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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