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Why are ASX 200 lithium shares falling so hard today?

The lithium carbonate price has fallen to its lowest level in more than a year.

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Bronwyn Allen
Bronwyn has 25 years of experience in journalism, copywriting, and media relations. She began her career as a reporter with News Corporation in Sydney in 1997. She later worked for two real estate corporations in communications and PR roles, then started her own freelance copywriting and publicity business. A keen shares investor, Bronwyn joined the Motley Fool Australia team as a copy editor and writer in June 2021.
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Key points
  • ASX 200 lithium shares are being bludgeoned on Friday, with Allkem shares bearing the brunt
  • Lithium shares are falling on news out of Shanghai that the lithium carbonate price has declined to its lowest level in more than a year 
  • Goldman Sachs has a very bearish outlook for lithium prices, tipping a continuing and dramatic decline for carbonate, hydroxide, and spodumene values

ASX 200 lithium shares are being bludgeoned on Friday following news out of Shanghai that lithium prices have fallen to their lowest level since January 2022.

Here is a summary of today's share market activity:

  • The Allkem Ltd (ASX: AKE) share price is down 7.2% to $11.56
  • The Pilbara Minerals Ltd (ASX: PLS) share price is down 6.1% to $4.02
  • The Liontown Resources Ltd (ASX: LTR) share price is down 6.2% to $1.59
  • The Sayona Mining Ltd (ASX: SYA) share price is down 6% today to 24 cents
  • The IGO Ltd (ASX: IGO) share price is down 6% to $12.98
  • The Mineral Resources Ltd (ASX: MIN) share price is down 5.3% to $84.30
  • The Core Lithium Ltd (ASX: CXO) share price is down 4.5% to 96 cents.
Rede arrow on a stock market chart going down.

Image source: Getty Images

What's behind the drop in ASX 200 lithium shares on Friday?

The Australian Financial Review (AFR) reports the lithium carbonate equivalent price has fallen to US$49,757 per tonne, according to Shanghai Metals Market data.

Lithium carbonate has been on a sustained decline since November 2022. Back then, the commodity was trading above US$86,100 per tonne. It has since lost 42% of its value.

Lithium prices are directly influenced by global demand for electric vehicles (EVs). Analysts are blaming China's cessation of EV subsidies this year for the continuing slide in lithium prices.

Top broker Goldman Sachs has been bearish on lithium prices since mid-2022.

In its latest forecast released before today's fall in the carbonate price, Goldman said all types of lithium would dramatically fall in value over the next few years.

The broker thinks supply will start to outweigh demand, thereby putting downward pressure on spot prices from 2H FY23.

Here are Goldman's forecasted prices.

Carbonate (per tonne)

  • Spot price today: US$49,757
  • 2023: US$53,300
  • 2024: US$11,000
  • 2025: US$11,000

Hydroxide (per tonne)

  • Spot price today: US$72,600
  • 2023: US$58,650
  • 2024: US$12,500
  • 2025: US$12,500

Spodumene 6% (per tonne)

  • Spot price today: US$5,080
  • 2023: US$4,330
  • 2024: US$800
  • 2025: US$800

Motley Fool contributor Bronwyn Allen has positions in Allkem and Core Lithium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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