Azure Minerals share price soars to 16-year high amid strong session for ASX lithium stocks

What's lifting lithium stocks today?

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The Azure Minerals Ltd (ASX: AZS) share price is soaring 7.6% to $3.98 amid a strong session for ASX lithium shares on Friday.

In earlier trading, Azure shares hit a 16-year high of $4 per share. There is no news out of Azure today.

Overnight, major US lithium stocks moved higher, including Livent Corp (ASX: LTHM), up 2.6%, and Sociedad Quimica y Minr de Chile SA (NYSE: SQM), up 1.9%.

ASX lithium shares performing strongly on Friday include:

  • IGO Ltd (ASX: IGO) shares up 4.7%
  • Allkem Ltd (ASX: AKE) shares up 4.8%
  • Pilbara Minerals Ltd (ASX: PLS) shares up 3.4%
  • Liontown Resources Ltd (ASX: LTR) shares up 6.6%
  • Sayona Mining Ltd (ASX: SYA) shares up 10.2%
  • Core Lithium Ltd (ASX: CXO) shares up 7.6%.

Meantime, the S&P/ASX All Ordinaries Index (ASX: XAO) is up 1.2%.

What's powering Azure Minerals shares today?

We can only speculate as to the reasons behind the surge in lithium stocks today, as this is certainly an industry with headwinds right now.

After all, lithium prices are still falling. The carbonate price is down by more than 70% over the past 12 months but has shown some stabilisation over the past four weeks with just a 1.8% dip.

This is having a dramatic impact on earnings for listed lithium shares.

Earlier this week, global US giant Albemarle Corporation (NYSE: ALB) wiped $1 billion off the top of its forecast EBITDA guidance range for FY23 after releasing its third-quarter report.

Perhaps offsetting this news are comments from Fed Reserve chair Jerome Powell this week that indicated US interest rates were close to their peak.

This indicates inflation is falling at an adequate pace, and it is anticipated that global consumer confidence may lift once it is clear that the interest rates hiking cycle in Western countries is over.

That higher consumer confidence could change the demand landscape for electric vehicles (EVs).

Trading Economics analysts say EV sales in China are projected to fall by 11% this year "as macroeconomic headwinds in the world's top EV consumer drove households to significantly cut back on large purchases".

Against this difficult backdrop, Azure is riding a wave of optimism, though. The company recently accepted a $3.52 per share takeover approach from SQM.

Since then, Gina Rinehart of Hancock Prospecting has built an 18% stake in Azure shares.

There is now speculation that Mineral Resources Ltd (ASX: MIN) is following suit after taking sizeable stakes in other lithium juniors Delta Lithium Ltd (ASX: DLI) and Wildcat Resources Ltd (ASX: WC8).

So, it's fair to say there is strong market interest in Azure shares right now.

What did Albemarle report this week?

Albemarle released its third quarter report this week. It reported net sales of $2.3 billion, up 10% year over year (yoy), and net income of $302.5 million or $2.57 per diluted share.

Adjusted EBITDA came in at $453.3 million, and the adjusted diluted earnings per share (EPS) was $2.74.

Albemarle downgraded its full-year FY23 forecasts, though.

Back in August, Albemarle told the market it was expecting net sales of between $10.4 and 11.5 billion. Now it expects between $9.5 billion to $9.8 billion.

Its forecast for adjusted EBITDA has gone from a range of $3.8 billion to $4.4 billion to a range of $3.2 billion to $3.4 billion.

In a statement, Albemarle said the downgrade reflected weaker lithium prices and higher costs.

In this current climate, Albemarle and its joint venture partners in Australia's biggest lithium mine, Greenbushes in Western Australia, are reportedly considering production cuts.

The Australian Financial Review (AFR) reported that discussions were ongoing between the partners. Meantime, Albemarle is also intending to rein in capital expenditure and M&A activity.

Albemarle recently dropped its takeover bid for Liontown Resources, citing "growing complexities" with the sale, one of which was likely Gina Rinehart amassing a 19.9% stake last month.

In the AFR, CEO and chairman Kent Masters said:

We will still look at M&A, but it's not going to be at the same scale that we were, frankly, looking at six months ago.

Masters warned that EV sales in the US and Europe could also decline next year due to a softer global economy.

Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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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