Core Lithium Ltd (ASX: CXO) shares have been among the top performers over the past 12 months, rocketing 172%.
That's across a period where the S&P/ASX 200 Index (ASX: XJO) lost 4%, mind you.
So, you're unlikely to fund any longer-term shareholders complaining.
But are there headwinds brewing for this leading ASX lithium stock?
Are Core Lithium shares suddenly on the nose?
In late morning trade, Core Lithium shares are down 4.3% at $1.50.
This follows a horror day yesterday, which saw the miner close down 15.8%. That, in turn, followed a stellar run higher on Monday, where the share price gained a whopping 11.7%.
It appears investors are trying to sort out the near-term trajectory of this top ASX lithium stock alongside the wider outlook for lithium prices heading into 2023.
Those same uncertainties saw US lithium giant Albemarle Corporation (NYSE: ALB) close down 6.5% overnight while rival Livent Corp (NYSE: LTHM) dropped 6.8%.
What is the outlook for lithium prices?
Core Lithium shares have been a clear beneficiary of rocketing lithium prices amid the global EV boom that's driven a sharp increase in demand for the battery-critical metal.
Much of that demand comes from China, a world leader in EV production.
And China happens to be where some of the big uncertainty is coming from. Uncertainty that looks to be roiling the Core Lithium share price this week.
Yesterday, The Australian Financial Review cited Credit Suisse analyst Saul Kavonic, who pointed to a potential decrease in lithium demand from China as driving a 7% fall in lithium carbonate futures on the Wuxi Stainless Steel Exchange.
Kavonic said there was "speculation in China that a major cathode producer might have slashed production targets and some Chinese firms forecasting softening in the market later in 2023".
As for where the lithium price is heading next and what type of headwinds or tailwinds Core Lithium shares can expect, that depends on who you ask.
What do the experts say?
Goldman Sachs remains rather bearish on its outlook.
According to Aditi Rai, global commodities strategist at Goldman (courtesy of the AFR):
With downstream overcapacity and slowing EV sales likely to become increasingly apparent over the course of next year, we expect downward pressure on the lithium price to build on surplus cues, particularly from the second half of 2023 onward.
Macquarie has a decidedly more bullish take.
The broker noted that lithium carbonate futures on the Wuxi Stainless Steel Exchange have gained 1.5% since the prior day's selloff and expects prices to remain "buoyant".
"Despite near-term future price volatility, we believe buoyant lithium prices present potential for valuation upside to all lithium names under our coverage universe," Macquarie analysts said.
Although downtrading Core Lithium shares to a neutral rating yesterday, Macquarie has a price target of $1.80 for the stock. That's 20% above the current share price.
