Why are ASX 200 lithium shares taking a lashing today?

ASX lithium shares are falling harder than the benchmark index and materials sector today.

Lithium shares trading lower this afternoon include:

• Piedmont Lithium Inc (ASX: PLL), down 2.87%
• Core Lithium Ltd (ASX: CXO), down 0.76%
• Sayona Mining Ltd (ASX: SYA), down 1.09%
• Pilbara Minerals Ltd (ASX: PLS), down 0.33%
• Liontown Resources Ltd (ASX: LTR), down 2.96%
• Lake Resources N.L. (ASX: LKE), down 2.5%
• Allkem Ltd (ASX: AKE), down 1.14%

For perspective, the S&P/ASX 200 (ASX: XJO) is 0.08% in the red.

What’s happening?

ASX lithium shares are broadly underperforming the materials index today. The S&P/ASX 200 Materials Index (ASX: XMJ) is down 0.19% at the time of writing.

On US markets, multiple lithium giants fell overnight. The Livent Corp (NYSE: LTHM) share price tumbled 6.18%, while Sociedad Quimica y Minera de Chile (NYSE: SQM) shares fell 4.72%. The Albemarle Corporation (NYSE: ALB) share price also shed 6.7%.

Speculation on lithium demand from China could be impacting sentiment in the lithium sector.

News emerged that Tesla Inc (NASDAQ: TSLA) could cut electric vehicle (EV) output from its Shanghai plant by more than 20% in December, Bloomberg reported.

But late on Monday in the US, a Tesla spokesperson described the report as “false news”, Reuters reported.

Last week, the South China Morning Post reported EV battery production will exceed domestic electric car makers’ demand threefold by 2025. EV battery makers are set to lift capacity by six times between this year and 2025, according to the report.

ASX lithium shares that have signed lithium supply agreements with Tesla include Liontown Resources and Piedmont Lithium.

Core Lithium negotiated with Tesla on an offtake agreement earlier this year. However, the date for concluding the term sheet passed in late October without any final agreement. Core Lithium CEO Gareth Manderson said at the time:

I want to thank Tesla for the time taken to negotiate with Core and look forward to maintaining an open and ongoing dialogue.

The post Why are ASX 200 lithium shares taking a lashing today? appeared first on The Motley Fool Australia.

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More reading

• Is Core Lithium the hottest stock on the ASX 200 right now?
• The Sayona Mining share price went backwards in November. What now?
• Can ASX 200 lithium shares come charging back in December?
• Why Arafura, Mayne Pharma, Pilbara Minerals, and Tyro shares are dropping today
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Monica O’Shea 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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