In late afternoon trade the Orocobre Limited (ASX: ORE) share price is on course to finish the day deep in the red.
At the time of writing the lithium miner's shares are down 12% to $3.44.
Why is the Orocobre share price being smashed?
This afternoon Orocobre released an update on commercial and production estimates for the first half of FY 2019 following the near finalisation of shipping schedules and pricing outcomes.
According to the release, the company expects lithium carbonate sales to be approximately 5,000 tonnes for the December half with an average sale price of US$12,470 per tonne.
This will be an 8% decline on the previous half and over 15% lower than the US$14,699 per tonne the company commanded in the first quarter.
During the second quarter soft market conditions in China have had a direct impact on shorter term contracts and led to the company averaging a price of US$10,800 per tonne for its lithium carbonate.
Unsurprisingly, news that Orocobre has seen the prices of its lithium carbonate fall has led to the shares of its rivals coming under pressure this afternoon.
At the time of writing the Galaxy Resources Limited (ASX: GXY) share price is down 9% to $2.23, the Pilbara Minerals Ltd (ASX: PLS) share price has fallen 7.5% to 63.2 cents, and the Kidman Resources Ltd (ASX: KDR) share price has plunged 9.5% lower to $1.05.
Should you buy the dip?
While Orocobre and Galaxy will still be generating significant free cash flows even at these levels, I wouldn't be in a rush to invest just yet.
I would suggest investors wait for signs that lithium prices have stabilised before weighing up the investment opportunity.
Until then I think mining giant's such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) would be the best shares to buy to gain exposure to the resources sector.
