Why are ASX 200 lithium shares having such a miserable week?

ASX 200 lithium shares are having a tough run on the share market this week.

Lithium shares that have dropped since market close on Friday include:

• Pilbara Minerals Ltd (ASX: PLS), down 6%
• Core Lithium Ltd (ASX: CXO), also 6% lower
• Mineral Resources Ltd (ASX: MIN), down 1.23%
• Allkem Ltd (ASX: AKE), 3.45% lower

In today's trade, Allkem shares slid 2.89%, Core Lithium shares dropped 4.73% into the red, Pilbara Minerals shares fell 2.89%, and Mineral Resources shares dropped 1.94%. For perspective, the S&P/ASX 200 Index (ASX: XJO) gained 0.18% today.

Let's take a look at what could be impacting ASX 200 lithium shares.

What's going on?

Lithium shares have been falling this week amid lower prices and pessimistic broker outlook for the price of so-called "white gold".

Citi cut its three-month price forecast for lithium carbonate from $40,000 to $25,000 a tonne.

Analysts also slashed their forecast for the lithium hydroxide price from US$45,000 to $35,000.

Commenting on the lithium price in The Australian, Citi analysts said:

We expect prices to remain under pressure into early 2Q'23 as downstream demand remains weak in China.

Supply chain participants remain under pressure to destock, reinforcing the downward pressure on prices.

The lithium carbonate index (battery grade) is down 3.91% to US$35,371.69 a tonne on the Shanghai Metals market.

Meantime, lithium carbonate (99.5% battery grade) is down 2.88% today after also falling 5% on Monday.

The lithium hydroxide index is down nearly 3% to US$47,628.06.

Commenting on the outlook for the lithium price in the Australian Financial Review, a new energy research spokesperson located in Shanghai said:

Overall, the current market maintains an imbalance between supply and demand which drives down the price.

Meanwhile, on Sunday, Australian Prime Minister Anthony Albanese said the world will need about "50 new lithium mines" by 2030. Speaking at a Resources Technology showcase in Perth, he touted Western Australia's role in a clean energy future:

We're looking at industries that will grow with the shift to clean energy. The opportunity that we have for lithium, not just to be mined here, but to be turned into batteries right here in Western Australia.

Share price snapshot

Pilbara shares have climbed 1.93% in the last 12 months.

Core Lithium shares have shed 49% during that time.

Mineral Resources shares have dropped 40% in the past year.

Meanwhile, the Allkem share price has lost 13.6% since this time last year.