ASX lithium shares have continued their ascent to stardom in 2022, with many names securing double and even triple-digit gains in the past year.
Lithium itself has been equally impressive. Despite a large selloff across broad commodity sectors, lithium has just ticked back to its highest levels on record – up 80% this year to date.
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Trends are cyclical, experts say
Despite the recent strengths in lithium carbonate and spodumene pricing, it's still important to consider that commodity markets move in cycles, based on global patterns of supply and demand.
That point is front of mind when considering the tidy gains some lithium purveyors have locked in this year.
Equity markets also move in cycles, based on similar drivers. Chief to the lengthy upside lithium stocks have enjoyed has been the surging demand for electric vehicles.
Such is the demand that, even in the midst of one of the deepest market drawdowns on record, investors continue to pile in, with some likening it to other frothy market trends of days gone by.
"It's the buy now, pay later of 2022 — the one that everyone wants a piece of when the market is not that exciting," Nabtrade's Gemma Dale said, reported by The Age.
Anyone familiar with buy now, pay later (BNPL) shares will know the hypergrowth (and, arguably, equally as hyper fall from grace) that the sector experienced following its revolutionary debut in Australia.
Nevertheless, lithium stocks continue catching bids in H1 FY23.
This is seen in names such as Pilbara Minerals Ltd (ASX: PLS), Core Lithium Ltd (ASX: CXO), and Allkem Ltd (ASX: AKE) to name but a few, up 110%, 354% and 72.5% over the past 12 months of trade respectively.
What's next for lithium?
As for the price of lithium, and where it heads next, all expectations are that it will remain top-heavy for some time to come.
"Data from the Shanghai Metals Markets pointed to a 108% surge in [lithium] carbonate imports in China, as the rebound in economic activity renewed demand for new energy vehicles," Trading Economics said.
"In the US, demand for electric vehicles is set to increase as the newly passed 'Inflation Reduction Act' extends tax breaks for new electric vehicle purchases," it added.
Meanwhile, an energy crisis in China stemming from "record-setting heat waves" has led numerous lithium producers in the country to suspend their operations for the time being, Trading Economics concluded.
