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Why Galaxy, Orocobre, and these ASX lithium miners surged higher today

The market may have pushed notably higher on Thursday, but one group of shares that outperformed the rest were the lithium miners.

Strong gains were made across the industry, much to the relief of their shareholders who have had to watch their shares sink lower and lower this year.

Here is a summary of how the lithium miners performed:

The Altura Mining Ltd (ASX: AJM) share price surged over 8% higher to 10.5 cents.

The Galaxy Resources Limited (ASX: GXY) share price stormed 11% higher to $1.27.

The Mineral Resources Limited (ASX: MIN) share price rose over 2% to $14.78.

The Orocobre Limited (ASX: ORE) share price jumped 6.5% higher to $2.73.

The Pilbara Minerals Ltd (ASX: PLS) share price raced over 8% higher to 46 cents.

Why did the lithium miners surge higher?

Investors were scrambling to get hold of Galaxy, Orocobre, and the rest of the lithium miners after a rare spot of positive news in the industry.

On Wednesday night lithium giant Albemarle released its second quarter update and smashed expectations.

The world’s largest lithium producer delivered second quarter revenues of US$885 million, representing a 3.7% increase on the prior corresponding. In constant currency revenue rose 6% over the same period last year. This was driven by a 2.3% lift in lithium sales and a 15.8% increase in bromine revenue.

In light of this strong second quarter, the company lifted its earnings per share guidance for FY 2019 to between US$6.25 and US$6.65 from between US$6.10 and US$6.50.

Another positive for the locally listed lithium producers was Albemarle’s near term outlook for lithium. It said: “We expect strong year-over-year growth for the remainder of 2019 in Lithium, led by continued strong demand in battery-grade applications and increased conversion capacity.”

Judging by the strong share price gains today, some investors appear to believe this could be a sign that lithium prices have finally reached an inflection point.

Whilst this could be the case, I would suggest investors sit tight and wait for proof before diving in.

In the meantime, this exciting small cap stock which has explosive growth potential could be the one to buy.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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