If you're interested in investing in the lithium industry, then you might want to hear what analysts at Morgans are saying.
It has been running the rule over the industry and has given its verdict on which ASX lithium shares you should be buying right now.
What is Morgans saying about ASX lithium shares?
Firstly, the broker highlights that the recent rebound in lithium prices has started to run out of steam.
Unfortunately, Morgans isn't confident that prices will rise further from here due to softening electric vehicle (EV) demand. Instead, it feels they are likely to moderate downwards towards long-term estimates. It said:
Chinese installations of new battery manufacturing plants continue but at a slower rate compared to last year. EV sales picked up in late March but have been steady since then. Some battery producers have reportedly been incrementally restocking.
Our view is that unless demand growth accelerates rapidly, lithium prices will not make meaningfully larger gains and, in fact, they may soften further as production capacity increases in FY24. […] Our expectation is that prices will continue to progressively moderate downwards towards our long-term price assumptions.
While this isn't great news for ASX lithium shares, the broker doesn't believe it should stop you from investing in the industry and has picked out two miners to buy.
These are Mineral Resources Ltd (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS), which the broker has add ratings and price targets of $93.00 and $5.00, respectively, on. It concludes:
Pure play names like Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd have rallied since AKE's merger announcement. We maintain our HOLD rating on AKE and also our ADD on PLS with some valuation upside from recent share price weakness. Mineral Resources Ltd continues to offer the largest upside to valuation and we retain our ADD rating.
