ASX lithium stocks just put in a great month.
Looking at some of the top lithium shares, here are how the share prices have moved since the opening bell on 12 July (as of yesterday's closing price), using the All Ordinaries Index (ASX: XAO) as our benchmark.
- All Ordinaries up 7.9%
- Core Lithium Ltd (ASX: CXO) shares up 76.2%
- Allkem Ltd (ASX: AKE) shares up 30.8%
- Lake Resources NL (ASX: LKE) share price up 161.5%
See what we mean.
And these are all multibillion-dollar companies, mind you.
ASX lithium stocks have been soaring again, following a brief retrace from May into mid-June, as investors mull over the supply and demand dynamics for the lightweight, highly conductive metal.
Demand for lithium is booming alongside rocketing growth in electric vehicle (EV) production. Lithium is a critical element in both EV and grid storage batteries.
With demand outstripping supply over the past year, lithium prices have rocketed more than 400% over 12 months, providing some gale-force tailwinds for ASX lithium stocks.
Clearly, the lithium price has a material impact on the share prices of the miners that produce it.
The question facing ASX investors now is, how are the supply and demand dynamics shaping up for the coming years?
Will there be a glut in lithium supply?
For some insight into that question, we turn to the analysts at S&P Global Market Intelligence.
In 2022, S&P Global forecasts that demand for lithium will continue to outpace supply growth, a scenario that should continue to support ASX lithium stocks.
"The magnitude of the deficit depends on producers' ability to execute projects, according to their existing plans," the analysts said.
"Lithium raw material supply is likely to improve especially from the September quarter onward, when the bulk of this year's new additions is scheduled to reach the market."
Looking further ahead, S&P Global forecasts:
The visible lithium supply pipeline could be sufficient to meet demand in 2023. The lithium market is likely to return to a deficit from 2024, which is forecast to deepen over 2024-26, as demand growth once again outpaces that of supply.
ASX lithium stocks eyeing new Chinese record
June saw a record number of EVs sold in China — a record ASX lithium stockholders may wish to note.
The world's second-biggest economy and most populous nation recorded 571,000 EV sales in June, according to the China Passenger Car Association (CPCA). That's a massive 141% increase from the number sold in June 2021.
As for the full year, the CPCA expects to see total Chinese EV sales increase 84% in 2022, reaching 5.5 million vehicles.
While China is a major lithium producer, Australia leads the globe, producing almost half the world's total output in 2020.
With EV sales going hyperbolic in China, ASX lithium stocks could enjoy some sustained demand growth.
