ASX lithium shares and ASX graphite shares dominated the ASX 200 on Friday.
Five of the 10 best-performing shares were battery materials producers or explorers.
Leading the pack was graphite miner Syrah Resources Ltd (ASX: SYR). Syrah had a share price gain of 6.35% to $1.017.
Syrah owns the biggest natural graphite deposit in the world — the 350 ktpa Balama mine in Mozambique.
It is also building a downstream processing plant in Louisiana in the United States, where it intends to produce graphite-based active anode material for the North American lithium battery supply chain.
Demand for graphite is expected to soar as the world continues to decarbonise.
Graphite is key for the anode part of a lithium battery. Lithium is key for the cathode part.
Last week, Syrah announced it had completed a definitive feasibility study (DFS) to expand its Louisiana plant from 11 ktpa to 45 ktpa.
Next was junior lithium explorer Lake Resources N.L. (ASX: LKE) with a share price bump of 4.2% to 50.5 cents.
Then it was lithium producer Pilbara Minerals Ltd (ASX: PLS) up 4% to $4.39. Fellow producer Allkem Ltd (ASX: AKE) was next, with its shares up 3.7% to $12.45.
Lithium explorer Liontown Resources Ltd (ASX: LTR) rounded out the five ASX lithium shares, up 3.6% to $2.84.
Why are ASX lithium shares dominating on Friday?
Lithium commodity prices have been on a steady decline since peaking in November 2022.
The primary catalyst for the fall was China ceasing cash subsidies for people who bought electric vehicles (EVs).
This reduced demand for EVs and their battery components for a period.
Suppliers with large inventories of lithium batteries began selling them for heavy discounts. This put a further drag on commodity prices.
The lithium carbonate price reached a 19-month low of just under US$24,000 last week.
However, there's been something of a turnaround since the big news from Chile last week.
The government of the world's second-largest producing country announced it will nationalise its industry and take a controlling stake in all new producers.
This may have ramifications for the supply chain and encourage customers to shop elsewhere for lithium.
Trading Economics analysis says Chile's decision to nationalise "is expected to hamper long-term output growth …".
Since 24 April, the lithium carbonate price has rebounded to above US$26,000 per tonne. This is the first sizeable increase since November 2022.
There has been no official news relating to any of these ASX lithium shares and graphite shares today.
Therefore, it is likely this new momentum in commodity prices caused today's share price increases.
