ASX lithium shares generally had a terrible time in 2023, but even by those standards Core Lithium Ltd (ASX: CXO) had a shocker.
Over the past 12 months, the stock has tumbled an eye-watering 83.9%.
Just since 20 December the miner has shed almost 46% of its valuation.
Yikes.
So with so many experts still backing a rise in lithium demand over the long run, is this the ideal opportunity to buy Core Lithium for dirt cheap?
Let's break it down:
Image source: Getty Images
Why have Core Lithium shares plunged?
Firstly, why have Core Lithium shares had such a torrid period?
The major factor is that global lithium prices have been in freefall.
One year ago the lithium price was hovering around 500,000 CNY per tonne, but it's now struggling to even sell for six digits.
According to TradingEconomics, global headwinds killed demand during 2023.
"Electric vehicle sales pessimism in China limited lithium demand for battery manufacturers, driving factories to skip their typical restocking season.
"EV battery sales also plateaued in the US, limiting lithium bidding as inventories remained high."
The second reason for investor trepidation about Core Lithium is a flow-on effect from those weak commodity prices.
Last week the business announced that much of its operations would be paused to conserve cash while lithium prices remain low.
Already last year Core Lithium had decided to suspend its BP23 underground project, and now mining in the Grants Open Pit has ceased.
It will, however, continue processing stockpiles already mined, which will provide revenue while the company waits for lithium prices to rise again.
"At 31 December, approximately 280,000 tonnes of ore stockpiles were available for processing, which allows for sufficient stocks to feed the concentrator until mid-2024 without any further mining," reported The Motley Fool's James Mickelboro earlier this month.
Answer the bloody question
So to answer the original question, are Core Lithium shares cheap enough to buy now?
According to the experts, it seems to be a "no".
CMC Invest currently shows none of the nine analysts that cover the stock think it's a buy.
Three rate it as a hold, two say it's a moderate sell, and four of them are urging a strong sell.
After years as the hottest investment theme, it seems the lithium outlook has cooled in recent times.
"Key market players… forecast the next lithium deficit to return only in 2028, an aggressive twist from speculations of persistent shortfalls," stated TradingEconomics.
"Previous investments in increasing supply may drive global carbonate equivalent supply to jump by 40% in 2024, according to UBS, deepening the ongoing surplus."
The "get out of jail" card for Core Lithium might be if a larger miner comes in with a Godfather takeover offer, which is not entirely out of the question.
