S&P/ASX 200 Index (ASX: XJO) lithium shares are having a day to forget on Thursday.
As we head into the lunch hour here's how some of the top lithium stocks are faring:
- Pilbara Minerals Ltd (ASX: PLS) shares are down 10.6%
- Core Lithium Ltd (ASX: CXO) shares are down 8.6%
- Allkem Ltd (ASX: AKE) shares are down 5.6%
See what we mean about a day to forget for ASX 200 lithium miners.
So, what's going on?
What are ASX 200 investors considering?
ASX 200 lithium shares look to be taking a hit on several fronts.
While the ASX 200 is down 0.3% at the time of writing, the materials sector is doing it far tougher, with the S&P/ASX 200 Materials Index (ASX: XMJ) down 0.8% at this same time.
ASX 200 lithium shares are falling a lot harder than that, of course,
Part of that looks to be thanks to the overnight 0.50% rate hike by the US Federal Reserve.
While that was largely expected, Fed chair Jerome Powell indicated the official interest rate in the world's top economy would reach 5.1% next year. That's higher than the market had previously priced in.
With Powell stating, "We still have some ways to go," growth stocks like ASX 200 lithium shares are coming under added pressure.
Then there's the outlook for lithium prices.
Lithium prices have hit all-time highs this year, an obvious boon for the big lithium companies.
But a growing number of analysts are beginning to align with Goldman Sachs' rather bearish mid-term outlook for lithium prices.
Demand from China, the world's largest EV producer, may slow amid a rocky reopening and reports that battery makers overproduced the needs of EV manufacturers this year, leaving excess supply heading into 2023.
The broker Citi upgraded its 2023 lithium carbonate forecast by 50% to US$60,000 per tonne, while expecting prices to retrace by 20% over the next 12 months. A price fall that would throw up significant headwinds for ASX 200 lithium shares.
According to Citi's Paul McTaggart (courtesy of The Australian), "China's reopening presents risks around expectations and, on a 12-month view, we see more downside than upside to our commodity basket."
While Citi forecasts a modest upside for aluminium, McTaggart said they envision "over 20% downside for thermal coal, rutile/zircon, nickel and lithium".
The Pilbara share price is down the most today. That's likely due to a 3.2% month-on-month decrease in the price it reported receiving for lithium at its battery material exchange (BMX) lithium auction this morning.
How have these ASX 200 lithium shares performed over the year?
As you can see in the charts below, the ASX 200 lithium shares have been giving back some of the stellar gains they posted earlier in the year.
Still, despite the retrace, the Pilbara share price remains up 52% over the past 12 months, the Core Lithium share price is up 105%, and the Allkem share price is up 37%,
