Liontown leads lithium rally as Morgans sees positive outlook
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The news: Lithium miners advanced on the ASX as Morgans analysts pointed to stabilising prices and expectations of a market recovery this year.
The numbers: Liontown, up 6.5% by 3:15pm AEDT, led a surge by lithium stocks Pilbara Minerals (4.6%), Mineral Resources (2.2%), IGO (1.7%) and Arcadium Lithium (0.2%). The materials sector was up 0.2% as the ASX 200 index fell 0.1%.
The context: Morgans analysts see China's long-term dominance in the lithium market as benefiting Australian spodumene producers such as Pilbara Minerals and Mineral Resources, which have offtake agreements with reputable Chinese battery makers.
They noted that lithium prices have remained largely stable since the end of September, ranging between USD800 ($1,292) and USD890 per tonne of spodumene concentrate, compared to lows of USD730 per tonne in August.
Current spot prices are higher than prices achieved in September, the analysts said, yet lithium equities have been sold off during the period.
Morgans has an 'add' rating on Pilbara and a 'hold' rating on MinRes, Liontown and Arcadium.
The source: Morgans research
