The S&P/ASX 200 Index (ASX: XJO) is having a fairly depressed kind of day so far this Wednesday. At the time of writing, the ASX 200 has slipped by around 0.15%. But ASX 200 lithium shares like Liontown Resources Ltd (ASX: LTR) are having a very different experience.
Liontown shares are on fire today. This lithium stock is currently up a whopping 7.97% at $1.25 a share.
But these gains aren't just confined to the Liontown share price. The ASX's largest lithium stock, Pilbara Minerals Ltd (ASX: PLS), is experiencing something similar, with Pilbara shares up 5.54% so far today at $4.10 each.
Sayona Mining Ltd (ASX: SYA) stock has risen 7.7%, while Arcadium Lithium plc (ASX: LTM) shares have increased by 4.43% at present.
So something is clearly in the water with lithium shares today.
Why are ASX 200 lithium shares like Liontown surging today?
Unfortunately, it's not really clear what that something in the water actually is. There's been no major ASX news out today from any of the big lithium stocks.
Looking at the US markets might provide some explanation, though.
Last night during US trading, we saw the share price of Albemarle Corporation (NYSE: ALB) rise significantly. Albemarle, a US$15 billion lithium giant, experienced a 5.82% surge in value last night, with the shares rising from US$121.52 up to US$128.59.
This was potentially a result of a major US broker in Mizuho raising its share price target from US$105 to US$115.
As one of the largest lithium stocks in the world, Albemarle shares often set the tone for what happens with the ASX's lithium players.
So that's one possible explanation for this bullishness we are seeing with Liontown shares and the like.
Another factor we can potentially point to is a growing sense that lithium prices may have found a bottom. ASX lithium shares like Liontown have been smashed in recent months as global lithium prices have plummeted. We saw this quantified in the recent ASX earnings reports from Pilbara Minerals and other lithium shares.
Have lithium prices found a bottom?
Sam Berridge, portfolio manager and resources specialist at Perennial Funds Management, recently told the Australian Financial Review (AFR) that "We are at the bottom… The big question is how long will [lithium] prices go sideways, and that depends on demand, rather than supply".
The same report quoted Ben Cleary of Tribeca Investment Partners, who said:
I don't expect [lithium spodumene] prices to bounce back towards where they were [around $US8,000 per tonne)… But I am comfortable that we could see long-term prices around $US1,200 which would still give Australian producers $US600 a tonne on a 50 per cent operating margin.
Of course, we also can't discount a simple reversion to mean for ASX lithium shares. Before this week, the Liontown share price, as well as that of Pilbara Minerals and other ASX lithium shares, were exploring multi-year lows. It's also possible that some investors are thinking that it's time to start buying back in at these historically low share prices.
Whatever the cause of today's strong bounce in lithium stocks, it will no doubt be welcomed by investors.
