ASX lithium shares are mostly down on Thursday, with Arcadium Lithium CDI Def (ASX: LTM) tumbling 8.1% to $9.99 amid the S&P/ASX All Ordinaries Index (ASX: XAO) easing by 0.4%.
Last year was highly challenging for ASX lithium shares amid spiralling lithium commodity prices. As an example, the lithium carbonate price fell by 80% to close the year at US$13,865 per tonne.
That's its lowest lowest level since August 2021.
What's dragging down the lithium price?
The big issue is a short-term global oversupply of lithium amid a slower growth rate in electric vehicle (EV) sales in China, the United States and Europe due to weaker economic conditions.
EVs are the key to lithium demand and accounted for 60% of global trade in 2022.
Global EV sales are projected to grow from 11 million in 2022 to 25 million in 2025, but that is unlikely to occur in a straight line as supply and demand ebbs and flows.
Lithium supply has been building over the past year as established producers ramp up production. Meantime, new mining companies have started production and explorers are locking in off-take agreements for the future.
The commodity price boom between mid-2021 and late 2022 encouraged many new players into the lithium exploration space. The lithium price went as high as about US$82,520 per tonne in November 2022 before nosediving in 2023.
Australian producers IGO Limited (ASX: IGO), the co-owner of the world's largest hard rock lithium mine, Greenbushes in Western Australia, is now stockpiling lithium to sell when the commodity prices rebound.
Australia accounts for 50% of global lithium extraction.
The latest resources and energy quarterly report released in December shows the federal government expects export volumes to rise in FY24 but earnings to fall due to weaker lithium commodity prices.
Meantime, the lithium mining sector in Australia will continue to grow as the miners expand operations.
Junior ASX lithium shares attract world's biggest miners in 2023
Amid the commodity price spiral in 2023, we saw lots of takeover and investment activity in the lithium sector. This indicates that global captains of the mining industry see a great long-term future for lithium.
Mega Australian miners Hancock Prospecting and Mineral Resources Ltd (ASX: MIN) bought major stakes in junior ASX lithium shares. Those stocks included Wildcat Resources Ltd (ASX: WC8), Azure Resources Ltd (ASX: AZS), and Liontown Resources Ltd (ASX: LTR).
Hancock's 19.9% stake in Liontown effectively killed off a takeover proposal from US giant Albemarle Corporation (NYSE: ALB).
We also saw the merger of Allkem Ltd and Livent Corp complete to create Arcadium Resources.
Earlier in 2023, Azure accepted a $3.52 per share takeover offer from Chilean giant Sociedad Quimica y Minr de Chile SA (NYSE: SQM). Hancock's blocking stake led to the companies joining forces to offer a renewed bid of $3.70 per share.
Amid this backdrop, many ASX lithium shares tumbled in price over the 12 months. But some bucked the trend and simply shot the lights out.
Here are the top 3 ASX lithium shares within the All Ords for share price growth over the year.
3 best ASX lithium shares of 2023
Wildcat Resources Ltd (ASX: WC8)
Wildcat shares exploded in 2023, recording a 2,796% share price gain in just 12 months. The ASX lithium share hit a 15-year high of $1.01 in November on the back of assay results from its Tabba Tabba mine.
The Wildcat share price is currently 70 cents, up 2.2% at the time of writing.
Azure Minerals Ltd (ASX: AZS)
Azure shares rocketed 1,544% in 2023, largely due to its takeover offer from SQM and impressive drilling results from its flagship Andover project in Western Australia. Management said the results "firmly entrench the Andover Lithium Project amongst the best lithium exploration projects globally".
Azure shares are steady at $3.70. The ASX lithium share reached a 52-week high in November at $4.37.
Latin Resources Ltd (ASX: LRS)
Latin Resources shares skyrocketed by 191% in 2023. Significant progress at the flagship Salinas Lithium Project in Brazil has been an ongoing tailwind for this ASX lithium share. In late June, Latin Resources announced the discovery of a "district scale lithium corridor". In October, it ran a $35 million institutional capital raise at 25 cents per share. That will fund an expanded drilling program for the whole of 2024.
The Latin Resources share price is 26 cents, down 4.8%. It reached a 52-week high of 43 cents in August.
