Why are ASX lithium shares off to such a flying start this week?

What is driving up ASX lithium shares today?

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Key points

  • ASX lithium shares are in the green today 
  • Macquarie brokers recommend ASX investors should own shares in lithium and rare earths
  • Shares surging today include Core Lithium, Pilbara Minerals and Sayona Mining 

ASX lithium shares are having a stellar start to the week amid improving market sentiment.

Shares in Pilbara Minerals Ltd (ASX: PLS) are trading 3.24% higher, while Core Lithium Ltd (ASX: CXO) shares are up 3.49%. Meanwhile, the Allkem Ltd (ASX: AKE) share price is climbing 1.53%.

Let’s take a look at what could be impacting lithium shares today.

Why are ASX lithium shares rising?

ASX lithium shares could be trading higher this week after Macquarie shared a positive outlook for the sector.

The broker suggested ASX investors ought to own lithium and rare earth shares, the Financial Review reported. As most people are likely aware, lithium and rare earths are considered vital components of the batteries that power EVs.

However, Macquarie did warn investors that electric vehicle (EV) sales in China dropped 39% in April amid COVID-19 lockdowns.

Lithium shares on the ASX also include Sayona Mining Ltd (ASX: SYA), LionTown Resources Limited (ASX: LTR) and Mineral Resources Ltd (ASX: MIN). Sayona is soaring 4.1%, while LionTown is up 2.86% today and Mineral Resources is climbing 1.3%. In earlier trade, the Mineral Resources share price jumped 3.65% before retreating.

Macquarie has placed an $85 price target on Mineral Resources, representing a 55% upside on the current share price of $54.73. Commenting on the company, Macquarie said:

Movements in spot iron-ore and spodumene prices present the most material risk to our earnings forecasts for Mineral Resources.

Mineral Resources is exploring lithium at Mt Marion and Wodgina in Western Australia. The company is also exploring iron ore and manganese. On 12 May, Mineral Resources announced the company’s first lithium output from the Wodgina project.

Commenting on this news, Mineral Resources chief executive Paul Brown said:

Achieving first spodumene concentrate production at Wodgina is a great milestone as we look to safely and efficiently build production momentum to meet significant global demand for lithium products.

Macquarie also tips lithium shares Pilbara Minerals, Allkem and LionTown Resources to “outperform”.

Share price snapshot

The Core Lithium share price has exploded 413% in the past 12 months, while Pilbara Minerals has surged 136%.

Allkem has rocketed 84% in a year, LionTown has soared 173% and Mineral Resources has leapt 22%.

Sayona Mining shares have increased more than 700% in a year.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned 1% in the past 52 weeks.

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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