Why has the Core Lithium share price crashed 30% in 12 days?

The Core Lithium Ltd (ASX: CXO) share price has joined today’s broader market rebound and is back in the green.

In early afternoon trade, the ASX lithium stock is up 1.15% at $1.325 per share, likely buoyed by the latest inflation report from the ABS.

Yet the stock has a lot more ground to make up than that.

The Core Lithium share price remains down 30% over the past 12 trading days, since closing at $1.87 per share on 14 November.

So, what’s going on?

Why is the ASX 200 lithium darling under pressure?

The Core Lithium share price has been battered recently amid investor concerns that lithium prices are due for a correction.

Indeed, the price of the battery critical mineral hit record prices earlier in November and has edged lower since.

A lot of the pressure stems from China.

China is the world’s top producer of EVs and has a massive appetite for lithium

However, the nation’s soaring COVID cases, the government’s zero-COVID policies, and the recent spate of protests against ongoing lockdowns have given investors in lithium stocks the jitters, throwing up headwinds for the Core Lithium share price.

Atop the virus issues, news also hit the wires that Chinese battery manufacturers have “overproduced” with forecasts that they’ll exceed Chinese EV makers’ demand by threefold by 2025.

Then there’s the slowdown in Chinese EV sales. While 2022 saw a huge lift in EV sales, new EV registrations fell 20% in October compared to September. This comes as the Chinese government prepares to axe subsidies for EVs next year.

The Core Lithium share price also could be getting hit as a number of big-name brokers and fund managers reduce their exposure to lithium stocks more broadly, with some issuing sell recommendations for Core Lithium shares specifically.

Both Credit Suisse and Goldman Sachs recently released fairly bearish near-term outlooks for lithium.

And Morgan Stanley reported its institutional desk could be looking at selling lithium shares. “Given the incredible performance in lithium, our insto desk is looking for selling, and the catalyst may come from the Chinese protests,” the broker said.

Joining the selling camp is Jarden Securities. Jarden, as The Australian reported this morning, has just slapped a ‘sell’ rating on Core Lithium.

Core Lithium share price snapshot

Despite the rough patch over the past 12 trading days, the Core Lithium share price remains up an impressive 131% over the past 12 months. That compares to a flat full-year performance posted by the ASX 200.

The post Why has the Core Lithium share price crashed 30% in 12 days? 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
• Is China responsible for decimating your ASX 200 lithium shares?
• Why did the Sayona Mining share price have a tough run today?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why is the Core Lithium share price in the red 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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