ASX Lithium Stocks Blazing High; Stable Subsidy, Cost-Cutting, Tesla Push- Positive Tailwind

  • Jan 16, 2020 AEDT
  • Team Kalkine
ASX Lithium Stocks Blazing High; Stable Subsidy, Cost-Cutting, Tesla Push- Positive Tailwind

ASX Lithium stocks are finally taking a breather from the plunge in prices amid adoption of various cost-cutting measures. Lithium mining companies such as Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE), Pilbara Minerals Limited (ASX: PLS) are now reaping the benefits of early adoption of cost-cutting measures amidst lithium supply glut.

Also Read: Galaxy Reaps Cost-Cutting Measures and Better Management; Kickstarts 2020 In Momentum

While the lithium front remains turbulent, many global giant players such as Albermarle, SQM are warning investors over the tough time the miners could face over the short-run in the wake of the oversupplied lithium market.

The lithium industry across the globe is now into the supply trap created by their own to quickly benefit out of the lithium demand, which had prompted the global lithium miners to produce a large quantity of lithium, which is now facing an absorption issue via weak demand.

Rio Tinto Limited (ASX: RIO) has advised the mining industry to control cost in the wake of supply glut across the lithium space, and many miners are now aggressively cutting production, deferring shipments till the time it is needed by offtake partners, halting expansion plans, and espousing many other such measures to bring the per unit of production cost down, while retaining a healthy market share.

Also Read: Lithium Producers Changing Tactics Amid Falling Prices

Despite all its challenges, the lithium mining companies are confident that the lithium demand would soon pick up with higher penetration of electric vehicle, energy-storage devices, and Gigafactory penetration.

To Know More, Do Read: SQM Optimistic on Lithium; Lithium Stocks Firm on the Australia Securities Exchange

The anticipation of lithium miners now seems to be paying off. Tesla delivered the Shanghai-made Model 3 cars much ahead of schedule, and many other automobile players are coming upfront to invest more in EV research & development, which in turn, coupled with a steady subsidy on new energy vehicles (NEVs) has provided a much-needed boost to the falling lithium stocks on the Australian Securities Exchange.

Steady Subsidy for NEVs in China

China state media quoted the industry ministry on 11 January 2019 while mentioned that China would not make any significant cuts over the subsidiaries of NEVs in 2020. Which further raised optimism across the lithium market, that the EV policies in China would remain steady for a while. The gesture by the ministry came right on time, as the market also anticipates the EV trend to grow strong in 2020.

Tesla and Other Automakers Bringing the Spark Back in Lithium Stocks

The year 2019 remained the biggest year for electric cars despite opaqueness over the future outlook. Many auto players such as GM, LG decided to spend USD 2.3 billion on electrification, and EV clinched 2.2 per cent of the global vehicle sale from January 2019 to October 2019.

EV market share rose slightly in March 2019 quarter to stand at 1.8 per cent as compared to the market share of 1.6 per cent in the previous corresponding period (or pcp) across the United States.

Tesla Model 3 led the front with 163,971 (Q1 2019) units amidst of boom start for the electric vehicle in 2019, and Tesla claimed threefold sales for its Model 3 between January 2019 to September 2019.

The dual pillar of spiked penetration or quick adoption of EV across the global front and steady subsidy policy is now bringing the charmer of lithium mining companies back, which are now starting the year 2020 on a strong note.

ASX Lithium Stocks Kickstart 2020 in Momentum

ASX lithium mining stocks are deriving momentum from the aforementioned reasons and is also reaping the cost-cutting benefits, which has provided the lithium stocks on ASX a spur to start the year 2020 in momentum.

Pilbara Minerals Limited (ASX:PLS)

The stock rose from $0.252 (intraday low on 24 December 2019) to the present high of $0.410 (as on 15 January 2020), which underpinned a price appreciation of ~62.70 per cent; however, the stock plunged slightly from its intraday high of $0.410 to settle at $0.360.

As per yesterday’s closing, the stock delivered a YTD return of 27.87 per cent.

Orocobre Limited (ASX:ORE)

ORE rose from $2.300 (intraday low on 9 December 2019) to the present high of $3.960, which underpinned a price appreciation of ~72.17 per cent; however, the stock fell slightly today on ASX to close at $3.580 (as on 15 January 2020).

As per yesterday’s closing, the stock delivered a YTD return of 34.88 per cent.

Galaxy Resources Limited (ASX: GXY)

The stock soared from $0.855 (intraday low on 24 December 2019) to the present high of $1.320 (as on 15 January 2020), which marked a price gain of ~54.38 per cent; however, the stock plunged slightly today to close at $1.210.

As per yesterday’s closing, the stock delivered a YTD return of 26.37 per cent.

Key Takeaways

  • ASX Lithium stocks are finally taking a breather from the plunge in prices amid adoption of various cost-cutting measures.
  • While the lithium front remains turbulent, many global giant players such as Albermarle, SQM are warning investors over the tough time the miners could face over the short-run in the wake of the oversupplied lithium market.
  • Despite all its challenges, the lithium mining companies are confident that the lithium demand would soon pick up with higher penetration of electric vehicle, energy-storage devices, and Gigafactory penetration.
  • The anticipation of lithium miners now seems to be paying off. Tesla delivered the Shanghai-made Model 3 cars, and many other automobile players are coming upfront to investment more in EV research & development, which in turn, coupled with a steady subsidy on new energy vehicles (NEVs) has provided a much-needed boost to the falling lithium stocks on the Australian Securities Exchange.
  • China state media quoted the industry ministry on 11 January 2019 while mentioned that China would not make any significant cuts over the subsidiaries of NEVs in 2020.
  • The year 2019 remained the biggest year for electric cars despite opaqueness over the future outlook. Many auto players such as GM, LG decided to spend USD 2.3 billion on electrification, and EV clinched 2.2 per cent of the global vehicle sale from January 2019 to October 2019.
  • ASX lithium mining stocks are also reaping the cost-cutting benefits, which has provided the lithium stocks on ASX a spur to start the year 2020 in momentum.


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