Core Lithium Ltd (ASX: CXO) shares are losing ground today.
Shares in the All Ordinaries Index (ASX: XAO) lithium miner closed Friday trading for 28 cents. In early afternoon trade on Monday, shares are changing hands for 26.5 cents apiece, down 5.4%.
For some context, the All Ords is down 0.4% at this same time.
If you already own or have been following this ASX lithium stock, you'll know that outsized daily price moves are nothing new for the Core Lithium shares.
Indeed, after the miner hit a multi-year closing low of 5.7 cents on 7 April, shares then rocketed an eye-watering 487.7% to close at a one-year-plus high of 33.5 cents on 8 January.
Following that meteoric rise, there looks to have been some profit-taking going on.
While the share price is still up a remarkable 364.9% since the April lows, shares have fallen 20.9% since 8 January.
Which brings us back to our headline question.
Should you buy the retrace in Core Lithium shares?
Core Lithium suspended mining operations at its flagship Finniss lithium project in January 2024.
But with lithium prices rebounding, Core Lithium shares could get another big leg up if Finniss returns to production in 2026, as I suspect it might.
It was only back in June that spodumene, a lithium-bearing ore, was trading for just US$575 per tonne. Last week, the same tonne was fetching more than US$2,000 per tonne.
With miners across the world reducing production in recent years, and a number following Core Lithium and suspending operations entirely, global lithium supplies have tightened amid strong demand growth. That's being driven by the growing global EV market alongside fast-growing demand for sustainable energy storage systems, spurred by power-hungry AI data centres.
Commenting on the impact of the fast-rising lithium price, Pls Group Ltd (ASX: PLS) CEO Dale Henderson said (quoted by The Australian Financial Review):
At US$2,000 per tonne or above, you're at a level that is above the consensus average of what the long-term price needs to be for the market. At these levels, a whole number of assets become profitable.
And in what could spur further gains for Core Lithium shares, the team at Barrenjoey expect lithium prices will reach US$3,250 per tonne in 2026.
"The rally has been driven by consistent destocking of lithium chemicals in China as lithium-ion battery production has continued to surprise the market to the upside, particularly energy storage system battery shipments," Glyn Lawcock, head of resources research at Barrenjoey, said.
So, will we see Core Lithium bring Finniss back online this year?
Commenting on the mothballed Finniss project on 13 October, Core Lithium CEO Paul Brown said:
During the September quarter we built on the Restart Study, delivering a 42% uplift in Ore Reserves with the inclusion of Carlton [in Finniss reserves] … We are well-capitalised and focused on advancing Finniss towards restart and a Final Investment Decision.
Foolish Takeaway
While I don't expect we'll see Core Lithium shares return to the $1.67 highs we saw back in November 2022 this year, should lithium prices keep marching higher and Finniss reopen, today might be an opportune time to buy the stock.
