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The lithium price has declined from the glory days of 2022, but could it recover in the future?
ASX shares impacted by the price of lithium include Pilbara Minerals Ltd (ASX: PLS), Core Lithium Ltd (ASX: CXO), Allkem Ltd (ASX: AKE), and Lake Resources (ASX: LKE).
Let’s check the outlook for the lithium price.
What could happen?
Lithium prices are in the spotlight again amid Chile’s plan to nationalise its lithium industry. This could certainly impact lithium supply globally.
China-based research company Antaike is forecasting lithium carbonate prices to average 220,000 yuan (US$33,828) a tonne this year. That’s 54% less than 2022, Asia Financial reported. However, this is still higher than the current lithium carbonate price.
Battery-grade lithium carbonate is currently up 0.81% to US$27,065.28 a tonne on the Shanghai Metals market.
Commenting on the outlook for the lithium price, CRU head of battery rare materials Martin Jackson said:
Demand was showing softness early in the year, but we’re still expecting a relatively tight market for the year on average and that’s because of much stronger demand from EV sales later in the year.
Meanwhile, ANZ commodity strategists Daniel Hynes and Soni Kumari are optimistic about the lithium price amid supply risks from resource nationalism. The strategists highlighted lithium prices are down nearly 75% from a recent record high.
Hynes and Kumari noted Chile’s policy will require state involvement for “all new lithium projects” and the use of environmentally friendly processing that is “still unproven on a commercial scale”. In a research report released Thursday, they added:
This could delay the delivery of its pipeline of projects. Other producers also have their issues. Increasing resource nationalism, particularly in Africa could limit growth in supply.
The outlook for the EV sector remains strong. We expect these latest supply side issues to reignite supply concerns, leading to a rebound in prices.
Share price snapshot
It’s been a mixed bag for the ASX’s major lithium shares. Pilbara shares have returned 54% in the last year.
Core Lithium shares have lost 28% in the past 52 weeks.
Allkem shares have shed 2% in the past year.
Meanwhile, Lake Resources shares have descended 74% in the last 12 months.
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