Why are ASX 200 lithium shares tumbling today?

Lithium shares are trading lower today, largely wiping out yesterday's gains.

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Key points

  • Many ASX lithium shares are sliding on the market today
  • Global lithium giants, including Livent and Albemarle, also dropped on US markets overnight
  • Today's falls wipe out gains many lithium shares enjoyed yesterday 

The S&P/ASX 200 Index (ASX: XJO) is currently up 0.28%, but ASX 200 lithium shares are missing the party.

Lithium shares in the red today include:

  • Core Lithium Ltd (ASX: CXO) shares are down 2.66%
  • Pilbara Minerals Ltd (ASX: PLS) shares are sliding 3.69%
  • Allkem Ltd (ASX: AKE) shares are falling 2.83%
  • Mineral Resources Ltd (ASX: MIN) shares are down 1.81%

So what is going on with ASX 200 lithium shares on Thursday?

What's going on?

ASX 200 lithium shares are following a similar trend to US lithium shares overnight.

Sociedad Quimica y Minera de Chile (NYSE: SQM) shares slid 1.65%, while the Livent Corp (NYSE: LITHM) share price fell 3.7%. Shares in Albermarle Corporation (NYSE: ALB) dropped 0.9%.

In news overnight, Chile and the European Union are set to sign a MOU [memorandum of understanding] to develop value-added lithium projects in Chile, Reuters reported.

Speaking at a joint press conference with Chile president Gabriel Boric, European Commission president Ursula von der Leyen said:

We're working to sign an MOU soon. This strategic association will allow us to create local added value here in Chile.

Multiple US and Australian lithium shares have projects in Chile, so this extra competition from Europe could be influencing lithium supply sentiment.

ASX 200 lithium shares are also shedding gains they made yesterday after the market responded positively to US inflation data.

Looking ahead, the team at Goldman Sachs has a sell rating on Core Lithium with a 75-cent price target. Morgans has given Core Lithium a hold rating and a $1.05 price target.

Meanwhile, Mineral Resources could be a buy, the team at Morgans believes. Analysts have placed an add rating on the share with a $93 price target.

The broker is optimistic about Mineral Resources' "diversification" which could help it tolerate volatility in lithium markets. Morgans said:

We see MIN's lithium/iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H CY23. 

Share price snapshot

Pilbara Minerals shares have surged 129% in a year, while Core Lithium shares have shed 12%.

Allkem shares are up 55% in the past 12 months, while the Mineral Resources share price has risen 31%.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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