ASX lithium shares took an absolute hammering yesterday.
And that's no hyperbole.
Having delivered some of the biggest gains on the index over the past 12 months, yesterday saw some leading ASX lithium shares lose almost a quarter of their value. And most every explorer and producer of the critical battery metal was down at least 10% by the closing bell.
Here's how some of the top ASX lithium shares fared:
- Allkem Ltd (ASX: AKE) closed down 15.4%
- IGO Ltd (ASX: IGO) closed down 12.7%
- Pilbara Minerals Ltd (ASX: PLS) closed down 22.4%
- Liontown Resources Ltd (ASX: LTR) closed down 19.1%
- Core Lithium Ltd (ASX: CXO) closed down 20.8%
- Lake Resources NL (ASX: LKE) closed down 12.9%
- Sayona Mining Ltd (ASX: SYA) closed down 13.3%
Image source: Getty Images
Why did ASX lithium shares get smashed yesterday?
If you missed the action yesterday, the rout among ASX lithium shares looks to have been spurred on two fronts.
First, Argentina – which has some of the world's largest lithium reserves – cited irregularities in lithium shipments over the past two years. The nation set a reference price for lithium carbonate exports of US$53 per kilogram.
Bearish sentiment on the mid-term outlook for lithium prices from Goldman Sachs also likely helped drive yesterday's selloff among ASX lithium shares.
The closely watched broker said that despite sharply increasing global demand for lithium, "We see the battery metals bull market as over for now."
Goldman said that too much investor money pouring into the sector has "generated an outsized supply response well ahead of the demand trend in focus. In this context, we see prices on a downward trajectory over the course of the next two years, with a sharp correction in lithium".
There may well be a third reason for yesterday's price falls, as reported by my Foolish colleague James.
As he noted, "Warren Buffett-backed electric vehicle company BYD is planning to buy six lithium mines in Africa." This has the potential to add yet more supply to a potentially oversupplied market over the medium term.
Bargain hunters swoop in
It's a decidedly different picture for ASX lithium shares today.
While the S&P/ASX 200 Index (ASX: XJO) is down 0.9%, all but one of the stocks named above are in the green as some bargain hunting looks to be taking place.
Here's how these lithium stocks are faring during mid-day trading today:
- Allkem shares are up 1.9%
- IGO shares are up 4.3%
- Pilbara Minerals shares are up 1.7%
- Liontown Resources shares are up 5.2%
- Core Lithium shares are up 5.4%
- Lake Resources shares are up 0.7%
- Sayona Mining shares are down 4.1%
