The Allkem Ltd (ASX: AKE) share price is on course to end the month in the red.
In afternoon trade, the lithium miner's shares are down almost 1% to $14.01.
If things stay this way, the Allkem share price will record a monthly decline of approximately 5.5%.
As a comparison, the ASX 200 index is set to record a decline of 1.5% for the period.
Why has the Allkem share price taken a hit in August?
Investors have been hitting the sell button this month after lithium prices tumbled.
As we covered here in the middle of the month, there were reports of significant weakness in Chinese lithium markets in August.
In fact, things were so bad that there were hardly any spot trades occurring. One producer claims that there was no demand for lithium hydroxide. It told Fastmarkets:
Lithium producers are not offering hydroxide since there's no demand for spot units. They are only delivering on long-term orders. But some traders are offering hydroxide though, in an attempt to offload them before prices decline further.
This sparked fears that the high lithium prices that producers have enjoyed over the last 12 months could be a thing of the past.
Allkem results given thumbs up
This news has offset the release of Allkem's FY 2023 results, which were well-received by the market.
For the 12 months ended 30 June, Allkem achieved record revenue of US$1,207.8 million and a 57% jump in net profit after tax from continuing operations to US$525 million.
This strong result was boosted by the average realised price for lithium carbonate almost doubling to US$43,981 per tonne compared to the prior year.
Is this a buying opportunity?
Goldman Sachs is likely to see the weakness in the Allkem share price in August as a buying opportunity.
It recently reiterated its buy rating with a $17.20 price target. This implies a potential upside of almost 23% for investors over the next 12 months.
