Lithium miners slump as Canaccord Genuity flags improved outlook
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The news: Shares in Australian lithium miners cut recent gains on Monday, even as Canaccord Genuity flagged that the down cycle in the sector has "now likely passed", with IGO and Pilbara Minerals best placed to benefit.
The numbers: Lithium miners Pilbara Minerals (-9%), Liontown Resources (-8.2%), Mineral Resources (-6.3%) and IGO (-5.9%) were all lower at 2:30pm AEST.
Canaccord Genuity had previously forecast a "likely slow-down" in global electric vehicle sales in 2025, due to tariffs, policy changes, and economic uncertainty. EVs rely heavily on lithium-ion batteries for energy storage, making lithium a critical commodity in the industry.
However, its global equity research team found that global EV sales were up 30% in the year to date, with China (+32%), EU (+26%) and Rest of World (+41%) markets offsetting flat sales growth in North America.
The context: Canaccord Genuity analysts said demand is now "much stronger" than they previously expected. They now see a "much tighter market and potential for continued pricing improvements" as demand growth overtakes supply growth.
By 2027, additional supply will be needed, the analysts noted, and in the absence of higher incentive levels this could drive a more dramatic pricing response.
The analysts said they have pivoted from their previously conservative stance on the sector, noting that IGO and Pilbara Minerals would be the "largest beneficiaries" of price moves among the ASX lithium stocks given both companies will be running at nameplate capacity.
The source: Canaccord Genuity research
