The Sayona Mining Ltd (ASX: SYA) share price has been a major underperformer on the ASX in 2024. Since trading began in January, shares are down more than 59%.
But after a more than two-year downtrend, the stock has finally caught a bid and begun to turn higher in the short term.
Since September 9, the Sayona Mining share price has jumped 32% and now fetches 3.1 cents per share.
But has this ASX lithium stock truly turned a corner, or is this just a temporary rebound? Let's see.
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Sayona share price rallies
Sayona's share price spiked earlier this month following the company's ASX Small and Mid-Cap Conference investor presentation.
Here, it showcased its North American Lithium (NAL) operations. First, the company reported its maiden full-year revenues of AU$201 million.
This was thanks to steady-state production at NAL, where Sayona holds a 75% interest (Piedmont Lithium Inc (ASX: PLL) owns the remaining 25%).
Sayona's total concentrate production hit 156 thousand (k) dry metric tonnes (dmt) for FY24.
Shipments to customers in the US and China reached 158k dmt over the year. Meanwhile, it posted a net loss of $119 million.
Aside from the financials, Sayona has expanded NAL's mineral resource base by 51%. As a result, the company expects to produce up to 210k tonnes of lithium this financial year in its NAL segment.
The Sayona share price has climbed nearly 21% since the investor presentation alone.
Market conditions and outlook
The broader lithium market has been under pressure this year, and Sayona hasn't been immune to those challenges.
Global oversupply and lower lithium prices have significantly impacted profitability for many producers. According to Trading Economics:
Lithium miners and producers in China continued to expand capacity and hunt for new reserves, with market players expecting global supply to soar by nearly 50% this year.
This magnified the current supply surplus amid the fallout of the battery glut due to government subsidies for firms across the supply chain.
But some are bullish on the metal. Those at Citi see a double-digit growth in lithium prices over the coming months, as global supply potentially moderates.
With the outlook on lithium in question, there could be other reasons behind the rally.
As my colleague Mitch recently reported, some of the recent gains in ASX lithium stocks are likely explained by short-sellers covering their positions – in other words, having to buy stock to hedge their bets.
Sayona – along with many other lithium miners – has routinely found its name on the ASX's top-ten most shorted stocks each week.
Tribeca Investment Partners noted that the mid-September rally was "almost 100 per cent short-covering".
The long-term outlook for the Sayona share price ultimately rests on the demand for lithium, and the products it gets used in, like batteries.
For now lithium carbonate prices remain in a slump.
Foolish takeaway
While the recent surge in Sayona Mining's share price offers a glimmer of hope for shareholders, the company still faces significant challenges in a tough lithium market.
At this point, there's no saying if this is the turnaround point for the stock.
Sayona Mining is down 66% in the past year.
