It has been a much better day for ASX 200 lithium shares on Tuesday.

After a heavy decline on Monday, they are rebounding strongly this afternoon.

ASX lithium shares rebound

Here’s what is happening in the lithium industry today:

• The Allkem Ltd(ASX: AKE) share price is up 3%
• The Core Lithium Ltd(ASX: CXO) share price is up 4%
• The IGO Ltd (ASX: IGO) share price is up 2%
• The Lake Resources N.L.(ASX: LKE) share price is up 4%
• The Liontown Resources Ltd(ASX: LTR) share price is up 4%
• The Pilbara Minerals Ltd(ASX: PLS) share price is up 4%

What’s happening?

On Monday, investors were selling off ASX lithium shares amid news that the world’s largest battery maker, CATL, is offering discounts to Chinese automakers.

According to Reuters, these discounts are being offered in response to a downturn in the price of lithium and a bid to win more orders. This sparked fears that this was an indication that CATL believes prices are going to be coming down rapidly from recent highs.

However, a note out of Canaccord Genuity this morning could have eased investor nerves. It has responded positively to an update out of Pilbara Minerals on Monday regarding a new sales arrangement for a 15,000 tonne cargo of spodumene concentrate.

This agreement has been structured to be based on a tolling arrangement under which Pilbara Minerals will receive the value of lithium hydroxide price for the product sold less an agreed amount for conversion and other costs.

Canaccord Genuity was pleased with the news and notes that the pricing implied by the agreement is “well north of our US$4,500/t MarQ’23 assumption and US$3,500/t JunQ’23 assumption.”

All in all, the broker appears confident that Pilbara Minerals is well-placed to deliver strong earnings in the near term and appears to see recent weakness is a buying opportunity. As a result, it has retained its buy rating and $5.00 price target on this ASX 200 lithium share.

Investors appear hopeful that sky high prices may not be over as feared, at least for now.

The post Why are ASX 200 lithium shares having such a stellar run today? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why is the Core Lithium share price rebounding 5% on Tuesday?
• At under 30 cents each, are these ASX lithium stocks cheap?
• Should I dig in and buy Pilbara Minerals shares before the ASX 200 lithium miner reports on Thursday?
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor James Mickleboro has positions in Allkem. 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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