What’s happening with ASX lithium shares as battery-grade lithium prices push higher?

Increased demand and investor interest in renewables has lifted lithium prices. But why are ASX lithium shares going nowhere?
The post What’s happening with ASX lithium shares as battery-grade lithium prices push higher? appeared first on The Motley Fool Australia. –

Cut outs of cogs and machinery with chemical symbol for lithium

ASX lithium shares, including Galaxy Resources Limited (ASX: GXY), Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE), have continued to grind sideways despite higher lithium prices. 

Latest lithium price update 

Fastmarkets provides updates for battery-grade lithium prices across China, Europe and the US. The latest update highlights: 

  • Asian seaborne lithium prices were steady against a backdrop of tight availability and firm demand; meanwhile Chinese suppliers have made aggressive offers for battery-grade lithium carbonate.
  • Spot trades in domestic Chinese market remained slow with consumers conducting “hand-to-mouth” purchases, but supply continued to be tight.
  • Europe, US battery-grade lithium spot prices continued to trend higher with deals reported at higher levels.

It notes that domestic lithium carbonate prices in China have increased to 87,500 yuan/tonne (~A$17,500) up from 70,750 yuan/tonne (~A$14,160) last month. 

Why have ASX lithium shares gone nowhere in 2021? 

ASX lithium shares have largely retreated back to where they were at the start of 2021.

It is worth noting that shares in the resource have more than doubled in the last 6 to 12 months. It’s possible that such price movements may have already been priced into the near-term bullish moves in spot prices.  

Despite their share prices going nowhere lately, ASX lithium shares have demonstrated significantly improved financial results and ramping up production to take advantage of improved prices. 

Pilbara Minerals, for example, reported a December half-year earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.7 million compared to the EBITDA loss of $24.1 million in the prior corresponding period. 

Similarly, Galaxy Resources is ramping up product at its flagship Mt Cattlin mine. Its production was previously lowered to ~60% of nameplate capacity to adapt to soft market conditions for most of FY20.

The mine is now positioned to ramp up production in response to strong customer demand, improving prices and reduced inventory levels. The company’s loss after tax for the December half also improved to US$31.3 million compared to the US$283.7 million in the pcp. 

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What’s happening with ASX lithium shares as battery-grade lithium prices push higher? appeared first on The Motley Fool Australia.

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