Why is the Core Lithium share price being trashed on Monday?

Person with thumbs down and a red sad face poster covering the face.Person with thumbs down and a red sad face poster covering the face.

The Core Lithium Ltd (ASX: CXO) share price is under heavy selling pressure today.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock closed on Friday trading for 96 cents. At the time of writing, shares are trading for 93 cents apiece, down 3.6%.

This won’t come as good news to Core Lithium shareholders, who’ve now seen the share price decline by 11% over the past five trading days.

But not everyone is losing money on the retrace.

Short interest in the lithium miner approached 10% last week, giving the company the dubious honour of being the fifth most shorted stock on the ASX.

Why are shares under pressure again today?

It’s not just the Core Lithium share price that’s sliding today. Most every ASX lithium stock is deep in the red.

Investors have been jittery about declining lithium prices since the price of the battery-critical metal hit all-time highs in November.

And news out of the United States over the weekend looks to have justified some of those fears.

In Friday trading, US-listed lithium heavyweights SQM, Albemarle and Livent each closed 10% lower.

As my Fool colleague James Mickleboro reports, the sell-off in the US stocks and today’s decline in the Core Lithium share price appear to be linked to “reports that the world’s largest battery maker, CATL, is offering discounts to some of the Chinese automakers it supplies batteries”.

The discounted battery offers come in the wake of three months of declining lithium prices and seem to indicate CATL doesn’t expect a big lift any time soon.

With a 37% global share of the electric vehicle battery market, when CATL starts to discount the price of its batteries, the ripples can spread far.

Judging by the investors’ reactions, the market may in accordance with CATL and pricing in lower lithium prices over the months ahead.

Core Lithium share price snapshot

With today’s intraday fall factored in, the Core Lithium share price is down 9% in 2023. As you can see in the chart below, shares in the ASX 200 lithium miner remain up 17% over the past 12 months.

The post Why is the Core Lithium share price being trashed on Monday? appeared first on The Motley Fool Australia.

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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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