ASX lithium shares are surging on Tuesday. Here’s why

It’s a good day on the charts for ASX lithium shares today. Let’s take a closer look.
The post ASX lithium shares are surging on Tuesday. Here’s why appeared first on The Motley Fool Australia. –

ASX lithium shares are surging today following a strong overnight rally in lithium-related peers on Wall Street.

High-profile overseas lithium players, including global chemical manufacturer and lithium miner Albemarle and electric vehicle (EV) maker Tesla, rallied 6.83% and 4.38%, respectively.

In morning trading, Galaxy Resources Limited (ASX: GXY)Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) pushed a respective 4.16%, 3.27% and 5.10% higher.

Emerging ASX-listed players and explorers, including Vulcan Energy Resources Ltd (ASX: VUL), Piedmont Lithium Inc (ASX: PLL) and Ioneer Ltd (ASX: INR), also opened higher, up 3.33%, 3.74% and 3.00%, respectively.

What’s driving ASX lithium shares higher?

Earlier this month, Forbes reported a potential “perpetual deficit” in lithium due to surging demand in electric vehicles (EV) and energy storage.

Forbes quoted bullish commentary from Credit Suisse, which had this to say: “Following production cuts (when the price crashed), the lithium supply glut has ended, and the market is now tightening as the EV revolution accelerates, supported by the global commitment to decarbonisation”.

Macquarie also provided its commentary in the report, saying: “We now forecast a wider market deficit for lithium in calendar 2021. The deficit is expected to grow in calendar 2022 and widen further in 2023 before some supply response starts to close the gap.”

Recent commentary out of Fastmarkets flags a similar supply tight narrative.

Fastmarkets reported that “lithium hydroxide prices in Asia remained firm, with suppliers reportedly struggling to meet demand while consumers prioritised the security of materials”.

The website quoted a producer as saying that everything needed to be settled before mid-June, “otherwise buyers can barely find anything on the spot market”.

Surging demand sees higher production from ASX-listed producers

ASX lithium shares have been quick to ramp up production or in some cases bring projects out of hibernation.

In Galaxy’s FY20 results, the company said it was operating its flagship Mt Cattlin mine at 60% of nameplate capacity.

The company opted for lower output in response to “soft market conditions in the sector for most of the year [FY20]”.

By early June, Galaxy was operating Mt Cattlin at full capacity and had upgraded its full-year guidance from 185,000 to 200,000 dry metric tonnes (dmt) to 195,000 to 210,000 dmt.

Similarly, Pilbara Minerals plans to grow its lithium production through the restart of its Ngungaju plant.

Pilbara said the restart would cost about $39 million and was expected to contribute approximately 180,000 to 200,000 dmt by mid-calendar year 2022.

The post ASX lithium shares are surging on Tuesday. Here’s why appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Here’s why the Ioneer (ASX:INR) share price is edging higher
Why Tesla stock took off on Monday

These 3 ASX 200 shares were big movers this Monday

Why is the Mineral Resources (ASX:MIN) share price up 4% today?
Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Kerry Sun owns shares in Vulcan Energy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Piedmont Lithium Inc. and Tesla. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!