It has been a much better day for ASX 200 lithium shares on Tuesday.
After a heavy decline on Monday, they are rebounding strongly this afternoon.
ASX lithium shares rebound
Here's what is happening in the lithium industry today:
- The Allkem Ltd(ASX: AKE) share price is up 3%
- The Core Lithium Ltd(ASX: CXO) share price is up 4%
- The IGO Ltd (ASX: IGO) share price is up 2%
- The Lake Resources N.L.(ASX: LKE) share price is up 4%
- The Liontown Resources Ltd(ASX: LTR) share price is up 4%
- The Pilbara Minerals Ltd(ASX: PLS) share price is up 4%
What's happening?
On Monday, investors were selling off ASX lithium shares amid news that the world's largest battery maker, CATL, is offering discounts to Chinese automakers.
According to Reuters, these discounts are being offered in response to a downturn in the price of lithium and a bid to win more orders. This sparked fears that this was an indication that CATL believes prices are going to be coming down rapidly from recent highs.
However, a note out of Canaccord Genuity this morning could have eased investor nerves. It has responded positively to an update out of Pilbara Minerals on Monday regarding a new sales arrangement for a 15,000 tonne cargo of spodumene concentrate.
This agreement has been structured to be based on a tolling arrangement under which Pilbara Minerals will receive the value of lithium hydroxide price for the product sold less an agreed amount for conversion and other costs.
Canaccord Genuity was pleased with the news and notes that the pricing implied by the agreement is "well north of our US$4,500/t MarQ'23 assumption and US$3,500/t JunQ'23 assumption."
All in all, the broker appears confident that Pilbara Minerals is well-placed to deliver strong earnings in the near term and appears to see recent weakness is a buying opportunity. As a result, it has retained its buy rating and $5.00 price target on this ASX 200 lithium share.
Investors appear hopeful that sky high prices may not be over as feared, at least for now.
