ASX lithium shares were broadly hammered lower in 2019 in a tough year for shareholders.
The Galaxy Resources Limited (ASX: GXY) share price is down 48.26% in the last 12 months to just $1.19 per share. That’s a long way shy of its $4.24 all-time high on January 5, 2019.
It’s been a similar story for pure-play Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) in the last year or so. The Orocobre share price finished 2019 in the red while Pilbara Minerals shares have more than halved in the last 12 months.
But, we are seeing a rebound of sorts on the ASX in January. Orocobre shares have bounced a whopping 35.17% in the last month alone.
So, what is driving the ASX lithium shares higher to start the year, and can the positive momentum continue?
Why ASX lithium shares are surging in 2020
One of the big factors has been optimism around where lithium prices are headed in 2020.
The Pilbara Minerals share price rocketed 10% higher on the ASX yesterday as investors buy back into the struggling miners. Orecobre shares are up a substantial 7.21% today while Galaxy shares have also surged 4.39%.
Lithium prices have been trending lower in recent years on fears of slowing demand and oversupply. The uptake of electric vehicles has so far failed to materialise and dominate car sales as anticipated.
Australia is the number one producer of lithium in the world, led by these 3 ASX lithium shares. However, investors appear to be betting on a more stable pricing environment in 2020, which could boost long-term investment and provide a solid foundation for earnings growth.
Is now the time to buy?
I’ve always been wary of investing without knowing exactly why prices are moving aggressively. Personally, I’ll be sitting tight and waiting to see some tangible numbers from these ASX lithium shares before buying in.
If you’re bullish on the industry’s prospects this year, however, these companies could be trading at the right price in January.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. 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.