Shareholders of Allkem Ltd (ASX: AKE), Core Lithium Ltd (ASX: CXO), Liontown Resources Ltd (ASX: LTR), and Pilbara Minerals Ltd (ASX: PLS) are likely to have one thing in common – an interest in lithium prices.
Given that these companies are (or will be) price takers, they are at the mercy of movements in commodity prices.
When times were good, like they were last year, lithium miners were generating mouth-watering profits from the battery material ingredient.
But all that has changed in 2023, with the price of the white metal crashing down to earth with a bang.
Here's a summary of lithium prices in 2022:
- Lithium carbonate: US$59,868 per tonne
- Lithium hydroxide: US$67,568 per tonne
- Spodumene 6%: US$4,368 per tonne
What are current lithium prices?
Since then, prices have tumbled and put significant pressure on ASX lithium shares.
Here's the latest spot prices according to a note out of Goldman Sachs this week:
- Lithium carbonate: US$17,076 per tonne
- Lithium hydroxide: US$14,663 per tonne
- Spodumene 6%: US$1,580 per tonne
This means that prices have fallen 71.5%, 78.3%, and 64%, respectively, from 2022 levels.
Is the pain over or are there more declines to come in 2024? Let's find out what Goldman is predicting.
2024 forecast
Unfortunately, Goldman doesn't believe there will be much respite for lithium prices in 2024 and continues to forecast further declines next year.
And given how accurate it has been in the past with its forecasts, it would be hard to argue against this being the case.
For 2024, the broker is forecasting:
- Lithium carbonate: US$13,377 per tonne
- Lithium hydroxide: US$14,263 per tonne
- Spodumene 6%: US$1,250 per tonne
And while it does expect a further decline in 2025, it believes that this will be the year that lithium prices bottom. So, there is a glimmer of light at the end of the tunnel.
