The lithium industry is having another difficult day on Thursday.
In late morning trade, the majority of ASX 200 lithium stocks are dropping notably lower.
Here's a summary of how some of the bigger names are performing:
- The Allkem Ltd (ASX: AKE) share price is down 3.5%
- The Lake Resources N.L. (ASX: LKE) share price has dropped over 5%
- The Liontown Resources Ltd (ASX: LTR) share price has fallen 3%
- The Mineral Resources Ltd (ASX: MIN) share price is down 2.5%
- The Pilbara Minerals Ltd (ASX: PLS) share price has tumbled 4%
Why are ASX 200 lithium shares dropping again?
Investors have been selling ASX 200 lithium stocks on Thursday after their US peers tumbled overnight.
The worst performer of the major lithium players was Liontown's suitor, Albemarle Corp (NYSE: ALB), which sank over 6% on Wall Street.
This was driven by a bearish broker note out of Bank of America Securities, which appears to have spooked investors.
According to the note, Bank of America Securities' analysts have downgraded the lithium stock to an underperform rating and slashed their price target on its shares by approximately 25% to US$195. This is largely in line with where the Albemarle share price trades now.
The broker made the move in response to falling lithium prices. Its analysts highlight that Chinese lithium carbonate prices ended last week at US$33,400 a tonne. But that's unlikely to be where prices stop, with Bank of America noting that futures contracts are pointing to prices falling to US$23,000 a tonne by August.
In light of this, the broker believes "that negative earnings revisions are forthcoming." And judging by the performance of ASX 200 lithium stocks today, the market appears to believe the same could apply to them.
