Lithium shares drop amid dim market outlook
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The news: Shares in lithium miners have dropped amid a pessimistic outlook for the sector from analysts and a downgrade in their position on the stocks.
The numbers: At 1:22pm AEST, shares in Pilbara Minerals had fallen 3.65% to $1.27. This is followed by losses for IGO (down 3.3% to $3.96), Mineral Resources (down 2.2% to $22.22), and Liontown Resources (down 0.8% to $0.62).
According to The Australian, UBS analysts have set an underweight rating for Liontown Resources, IGO and Pilbara Minerals and have cut their target share prices to $0.50, $3.60, and $1.10 respectively.
Meanwhile, Mineral Resources’ rating has been dropped to ‘neutral’ with a target price of $25.70.
The long-term price traget for spodumene was also cut back by 8% to USD1,200 ($1868.17) per tonne.
The context: A Citi research note also provided a dim outlook for the sector, saying industry experts at the bank's Pan-Asia Conference hosted this week flagged that the lithium average selling price has been sliding and they expect the downtrend to continue.
However, the note says there is a potential upside risk if China's CATL again suspends lithium production in the future "as its cash cost is barely break-even as of now".
The Citi note also said the Shanghai Metals Market currently forecasts electric vehicle battery demand to be up 15% year on year, and battery energy storage system demand to be up between 10% to 15%.
The sources: The Australian, Citi research
