The Sayona Mining Ltd (ASX: SYA) share price is having an uneventful start to the week. Following a 10% fall over the preceding two weeks, uneventful might be welcomed by investors.
Heading into the afternoon, shares in the lithium exploration company are a touch weaker than their previous closing price. At nearly a $2 billion market capitalisation, Sayona shares are now valued at 21 cents a pop.
The Sayona share price is not inexperienced when it comes to significant drawdowns. Between April and June, the company's shares suffered a brutal 68% tumbling. Similarly, the recent 10% decline brings Sayona's latest regression from the September high to 40%.
Let's look at what could have caused the recent fortnight of pain.
Say it ain't so
Confidence in the Sayona share price has been languishing in recent weeks as the lithium price softens. According to Trading Economics, the going rate for lithium carbonate is down nearly 3% since 5 December. This is further supported by what was released to the market last week by Pilbara Minerals Ltd (ASX: PLS).
The lithium producer revealed the results of its most recent spodumene concentrate auction via the Battery Material Exchange (BMX). Disappointingly, the auctioned price was equivalent to US$8,299 per dry metric tonne — falling 3.2% from its prior auction in November.
Sayona investors have clearly grown nervous as lithium prices make their first retreat since May. Prior to this downtrend, the market price for the electrifying metal had surged nearly 30%.
Possibly adding to the fear of future lithium demand, The University of Sydney posted about a potential lithium-ion alternative on 7 December. Researchers are investigating a low-cost battery that holds four times the energy capacity of lithium-ion and is said to be 'far cheaper'.
Making use of sodium and sulphur, the alternative option could pose a threat to lithium demand if the team is able to commercialise the technology.
Shorts still favouring the Sayona share price
The confluence of negatives for lithium in the short term appears to have fortified the Sayona share price as a popular option for short sellers.
Based on our latest most shorted ASX shares list, Sayona has made the cut again with 9.5% of its shares sold short. Although, in the previous week, the lithium explorer was marked with a 9.9% short interest.
Yet, the Sayona share price remains 51% in the green compared to where it was heading into this year.
