Mineral Resources Ltd (ASX: MIN) shares and Pilbara Minerals Ltd (ASX: PLS) shares alike have had a year to forget.
Both S&P/ASX 200 Index (ASX: XJO) mining stocks have faced stiff headwinds from slumping lithium prices amid a medium-term oversupply of the battery-critical metal.
As a mining services company and more diversified resources producer, Mineral Resources shares have also been impacted by lower iron ore prices.
In afternoon trade today, Pilbara Minerals shares are down 2.5%, trading for $1.35 each. That sees the ASX 200 lithium stock down 65.4% over 12 months.
It's a similar story for Mineral Resources. With shares down 4.7% in intraday trading today, changing hands for $22.96 apiece, this mining stock is down 69.4% since this time last year.
So, after this horror year, which ASX 200 mining stock looks to be the better bargain buy?
What's the outlook for the lithium market?
Both Pilbara Minerals and Mineral Resources would benefit from any uplift in global lithium prices.
In a research report released on Monday, Macquarie Group Ltd (ASX: MQG) noted that:
The lithium market has remained subdued with all key prices lower YTD. China Spodumene Li2O 6% CIF (Asian metal) and Asia lithium hydroxide dropped against after a small rebound in early CY25, down 19% and 5%, respectively, while China lithium carbonate and hydroxide declined 17%/8%, CY25 to date.
However, the broker pointed to expectations of very strong lithium demand growth as potentially lifting lithium prices out of the basement.
Atop growing demand, Macquarie said that "multiple Chinese companies have planned "maintenance" in the near term, which would result in lower lithium carbonate output".
And the broker added that Aussie lithium producers are also slowing production and curtailing global supplies.
"Half of major lithium projects under our coverage are loss making already, which could result in further supply curtailment or run rate rationalisation," Macquarie said.
As for which ASX 200 mining stock has the most potential upside…
What does Macquarie forecast for Mineral Resources shares?
Turning to Mineral Resources share first, Macquarie noted:
MIN's share price ratio versus PLS has remained largely steady over the last ~1.5 years. However, we note that the miner has a more diversified portfolio, with group governance being an overhang.
The near-term focus would be on Mt Marion's performance due to its high strip ratio and Onslow capex requirement and opex guidance update with the inclusion of a wet plant.
The broker added that, "Movements in spot iron-ore and spodumene prices present the most material risk to our earnings forecasts for MIN."
With those risks in mind, Macquarie has an outperform rating on Mineral Resources share with a $35.00 12-month price target. That represents a potential upside of more than 52% from current levels.
How about Pilbara Minerals shares?
Macquarie also has an outperform rating on Pilbara Minerals shares.
The broker said some of the bigger risks for the ASX 200 mining stock's performance included commodity price and currency volatility, including the impact of tariffs on demand. Tariffs could either help or hinder the miner's performance, depending on a range of as yet unknown factors.
Noting, however, that Pilbara Minerals "remains a high-quality lithium exposure which has underperformed both Aussie and international peers," Macquarie has a 12-month price target of $2.40 on the stock. That's almost 80% above the current Pilbara Minerals share price,
So, if you're gunning for the biggest one-year gain, Macquarie expects Pilbara Minerals shares will outpace its 52% forecast gains for Mineral Resources shares.
