Why are ASX 200 lithium shares falling so hard today?

Rede arrow on a stock market chart going down.Rede arrow on a stock market chart going down.

ASX 200 lithium shares are being bludgeoned on Friday following news out of Shanghai that lithium prices have fallen to their lowest level since January 2022.

Here is a summary of today’s share market activity:

  • The Allkem Ltd (ASX: AKE) share price is down 7.2% to $11.56
  • The Pilbara Minerals Ltd (ASX: PLS) share price is down 6.1% to $4.02
  • The Liontown Resources Ltd (ASX: LTR) share price is down 6.2% to $1.59
  • The Sayona Mining Ltd (ASX: SYA) share price is down 6% today to 24 cents
  • The IGO Ltd (ASX: IGO) share price is down 6% to $12.98
  • The Mineral Resources Ltd (ASX: MIN) share price is down 5.3% to $84.30
  • The Core Lithium Ltd (ASX: CXO) share price is down 4.5% to 96 cents.

What’s behind the drop in ASX 200 lithium shares on Friday?

The Australian Financial Review (AFR) reports the lithium carbonate equivalent price has fallen to US$49,757 per tonne, according to Shanghai Metals Market data.

Lithium carbonate has been on a sustained decline since November 2022. Back then, the commodity was trading above US$86,100 per tonne. It has since lost 42% of its value.

Lithium prices are directly influenced by global demand for electric vehicles (EVs). Analysts are blaming China’s cessation of EV subsidies this year for the continuing slide in lithium prices.

Top broker Goldman Sachs has been bearish on lithium prices since mid-2022.

In its latest forecast released before today’s fall in the carbonate price, Goldman said all types of lithium would dramatically fall in value over the next few years.

The broker thinks supply will start to outweigh demand, thereby putting downward pressure on spot prices from 2H FY23.

Here are Goldman’s forecasted prices.

Carbonate (per tonne)

  • Spot price today: US$49,757
  • 2023: US$53,300
  • 2024: US$11,000
  • 2025: US$11,000

Hydroxide (per tonne)

  • Spot price today: US$72,600
  • 2023: US$58,650
  • 2024: US$12,500
  • 2025: US$12,500

Spodumene 6% (per tonne)

  • Spot price today: US$5,080
  • 2023: US$4,330
  • 2024: US$800
  • 2025: US$800

The post Why are ASX 200 lithium shares falling so hard today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Allkem and Core Lithium. 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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