Core Lithium Ltd (ASX: CXO) faced a challenging November, experiencing a month-end decline of 22.2%, and this trend appears to persist into December. As one of the ASX lithium stocks, the shares of this S&P/ASX 200 Index company closed yesterday's trading at 25.5 cents. However, as of midday on Tuesday, the stock is valued at 23.5 cents, reflecting a 7.8% decline.
Investors and market analysts are likely closely monitoring the performance of Core Lithium Ltd and other ASX lithium stocks, considering factors such as market dynamics, industry trends, and company-specific developments that contribute to the observed fluctuations in the stock's value.
December has proven even more challenging for Core Lithium, with the stock down 16% so far. This represents the seventh consecutive trading day of losses unless there is a substantial afternoon turnaround.
One factor contributing to the renewed selling pressure across lithium stocks, including Core Lithium, is the uncertainty around Australian miners gaining access to funds under the United States Inflation Reduction Act (IRA). Concerns have arisen regarding the eligibility of Aussie miners for the billions of dollars available through the IRA, as the US Department of Energy drafted rules excluding companies where China, Iran, Russia, or North Korea hold more than a 25% interest.
In November, Core Lithium faced headwinds primarily driven by the continued decline in global lithium prices, with lithium carbonate prices dropping over 30% during the month. Analysts, including those at Goldman Sachs, predicted further price declines into 2024. Goldman's warnings included concerns about Core Lithium's susceptibility to falling lithium prices, potentially widening the discount of its low-grade lithium. Additionally, the combination of inflationary cost pressures and falling lithium prices raised the possibility of Core Lithium launching another capital raising, which typically dilutes the value of existing shares.
With the recent sell-off, Core Lithium's share price is down 82% over the past 12 months. However, long-term investors who purchased shares five years ago are still holding gains of 292%.