Why are these ASX-listed lithium stocks in red in last 5 days?

Highlights:

• Due to rising cases of COVID-19 in China, prices of lithium have been falling for the past few days
• The fall in lithium prices has resulted in a decline in share prices of lithium suppliers
• The Materials index closed in the red on Monday (28 November 2022)

Prices of battery materials have been declining for the past many days, and the cause is the rising cases of COVID-19 in China.

China is No. 2 economy in electric vehicle (EV) production globally, and much of the lithium demand comes from China. Data by Asian metal Inc. showed that EV registration decreased by more than a fifth in October compared to previous month. According to a media source, the prospect of lower EV sales in coming months has led to the cooling of lithium prices.

The softening of lithium prices has resulted in a fall in share prices of lithium suppliers. On Friday, the share price of Sociedad Quimica y Minera de Chile (NYSE:SQM) closed 6.80% down, Livent Corp (NYSE:LTHM) closed 8.81% lower, and Albemarle Corporation (NYSE:ALB) declined 3.91%.

Share prices of ASX-listed lithium stocks have also witnessed some significant falls in the past five trading sessions. For instance, the share price of Core Lithium Limited (ASX:CXO) has dropped by more than 9% in the past five trading sessions, although the company did not share any price-sensitive news during the stated period.

In line with this, let’s take a look at the performance of the ASX-listed lithium stocks; Core Lithium Limited (ASX:CXO), Liontown Resources Limited (ASX:LTR), Allkem Limited (ASX:AKE), and Lake Resources N.L. (ASX:LKE).

On 28 November 2022, the S&P/ASX 200 closed 0.42% lower at 7,229.10 points. The Australian stock market benchmark index has lost 0.15% in the past one year, and on a YTD basis, it has lost 4.75%.

Seven out of the 11 significant sectors ended in the red, along with the benchmark index. The energy sector recorded the highest fall of 1.68%, and the telecommunications services sector closed 0.62% higher. 

The materials sector ended 0.91% lower at 17,195.60 points. In the past one year, the index has gained 9.69%. 

Core Lithium Limited (ASX:CXO)

The share price of Australian lithium producer, Core Lithium, closed 3.37% lower at AU$1.29 on Monday. With this, the share price has dropped by 9.15% in the past five trading sessions. In one year, it has improved by 143.40%, and on a YTD basis, it has increased by 104.76%.

Core Lithium is engaged in developing the Finnis Lithium project, located in the Northern Territory. The project is within proximity of gas, rail, a power station, and Darwin Port. According to the company’s official website, the first production is expected to commence before the end of 2022. As reported, the company has established a binding offtake agreement and is finalising agreements within the electric vehicle and lithium battery supply chain industries.

In the annual general meeting, the company informed that in March 2022, mining started, and in September 2022, the spodumene core was uncovered. On 11 November 2022, the first product, DSO (direct shipping lithium ore) loaded and left the site for Darwin Port.

Liontown Resources Limited (ASX:LTR)

The share price of Liontown closed 7.50% lower at AU$1.85 per share on Monday. The share price has dropped by 9.76% in the last five trading sessions. In one year, the share price is virtually unchanged, and on a YTD basis, it has gained 5.71%.

Liontown is engaged in the production of Tier 1 battery Materials which are required by the energy storage and electric vehicle industries. Currently, the company manages lithium deposits in the Kathleen Valley and Buldania in Western Australia.

In the financial year 2022 (FY22), the company demerged Minerals 260 and sold the Toolebuc Vanadium project. The company shared that in the Kathleen Valley Lithium project, it had completed off-take agreements for approximately 90% of start-up production. It also got board approval for the final investment decision and finalised the Ford funding facility.

In the Buldania project, the company shared that multiple targets were tested. In addition, in the Northwest area of the project, the company had defined new, multiple lithium-mineralised pegmatites and reported significant lithium results with mineralisation open in all directions.

Allkem Limited (ASX:AKE)

Shares of Allkem closed 0.68% down at AU$13.08 per share on 28 November 2022. In the last five trading sessions, the shares have lost 9.86%. In one year, it has increased by 38.12%, and on a YTD basis, it has surged by 16.79%.

Allkem manages a portfolio of lithium chemicals in Argentina, Australia, and Japan. The company is dual listed on the Toronto Stock Exchange and the Australian Securities Exchange. According to the company’s website, it intends to expand its production three fold by 2026 and achieve the target of producing 10% of global lithium in the next 10 years.

Olaroz is Allkem’s flagship project located in Argentina. Other projects are Mt Cattlin, Naraha, Sal de Vida, James Bay and Cauchari. Allkem shared that design work and active development in Argentina and Canada are underway to increase the scale and flexibility of the portfolio to meet lithium market growth.

The company reported revenue of US$452 million from the Mt Cattlin project with a gross cash margin of 80%. According to annual general meeting results, the project is on track to achieve its production guidance of 140-510kt in FY23.

From the Olaroz project, the company recorded revenue of US$293 million, up 341% over previous year.

Lake Resources NL (ASX:LKE)

The share price of Lake Resources closed 5.08% lower at AU$0.94 per share on Monday. With this, it has decreased by 10.95% in the last five trading sessions. In one year, the share price has surged by 8.72%, and on a YTD basis, it has decreased by 14.22%.

Lake Resources claims to be a clean lithium developer that employs clean technology for developing lithium from the Kachi project. Its flagship project is located in Argentina. The company also manages three other lithium brine projects in Argentina. The company’s 100%-owned projects are Cauchari, Olaroz, paso and Kachi. These four projects cover 2,200 sq km.

A pre-feasibility study on Kachi indicated the potential for low-cost operations with a long life.