Lithium stocks slump as ore prices drag
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The news: Lithium miners are continuing to take share price hits amid an ongoing decline in ore prices driven by oversupply.
The numbers: At 12:04pm AEST, Mineral Resources was the second-worst performer on the ASX 200, down 7.3% to $20.6.
Liontown Resources was down 6.6% to $0.57, Pilbara Minerals was down 5.8% to $1.20, and IGO was down 4.2% at $3.72.
The context: Last week, UBS analysts downgraded their position on all four aforementioned lithium miners, expecting continuing oversupply to weigh on long-term prices.
The analysts also lowered their forecast for long-term spodumene prices by 8%, revised down forecasts for lithium demand from EV production, and noted that overperformance of battery energy storage systems is not enough to offset the revisions.
However, Morgan Stanley analysts are more optimistic despite the oversupply of lithium, noting that China’s pure EV sales are up 51% year-on-year for the period in Jan-April.
The investment bank has an overweight position on Mineral Resources’ and Pilbara Minerals shares and an equal weight position on IGO.
The sources: ASX, Morgan Stanley research
