Why are ASX 200 lithium shares crashing today?

Investors in the lithium space won't be smiling on Tuesday.

A worried man holds his head and look at his computer.

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It has been another difficult session for ASX 200 lithium shares on Tuesday.

In morning trade, the lithium industry is a sea of red with heavy declines being recorded across the board.

Here's a summary of how ASX 200 lithium shares are currently performing:

  • The Allkem Ltd (ASX: AKE) share price is down 4% to $8.28.
  • The Core Lithium Ltd (ASX: CXO) share price is down 10% to 23 cents.
  • The IGO Ltd (ASX: IGO) share price is down 3.5% to $7.76.
  • The Liontown Resources Ltd (ASX: LTR) share price is down 7% to $1.26.
  • The Mineral Resources Ltd (ASX: MIN) share price is down 4% to $57.47.
  • The Pilbara Minerals Ltd (ASX: PLS) share price is down 5.5% to $3.34.
  • The Sayona Mining Ltd (ASX: SYA) share price is down 7% to 5.2 cents.

Why are ASX 200 lithium shares being sold off?

Today's weakness appears to have been driven by heavy selling in the industry on Wall Street overnight amid falling lithium prices.

Sociedad Química y Minera de Chile SA (NYSE: SQM) was one of the hardest-hit lithium stocks, dropping 8% during last night's session. Fellow giants Albemarle Corporation (NYSE: ALB) and Livent Corp (NYSE: LTHM) weren't far behind with declines of 5% and 5.5%, respectively.

Lithium prices continue to fall

According to a note out of Goldman Sachs, spot lithium prices have continued to fall since last week.

Its latest data has the following spot prices (per tonne):

  • Lithium carbonate: US$16,112
  • Lithium hydroxide – China: US$13,695
  • Spodumene 6%: US$1,460

This means that prices have fallen 5.6%, 6.7%, and 7.6%, respectively, in the space of a week.

They are also now some distance away from their averages during the first quarter of calendar year 2023. At that point, spot prices per tonne were fetching the following per tonne:

  • Lithium carbonate: US$63,232
  • Lithium hydroxide – China: US$59,190
  • Spodumene 6%: US$4,368

Unfortunately, Goldman sees more pain ahead and is forecasting prices to continue to soften in 2024 and 2025.

Motley Fool contributor James Mickleboro has positions in Allkem. 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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