Will These Lithium Stocks Rally Over the Coming Months?

After lithium demand and prices fell in 2023, there’s a possibility that the industry could recover in 2024. Here is a collection of lithium stocks to keep an eye on.

• Pilbara Minerals has paused its quarterly dividend to strengthen its balance sheet.
• Albemarle has downgraded its 2030 demand forecast due to a slowing EV transition.
• Ganfeng Lithium has issued a profit warning due to the “cyclical” nature of the lithium industry.

Pilbara

The Dividend Pause Stock

Pilbara Minerals [PILS:XA] has paused its dividend following a 78% slump in profits for the first half of fiscal 2024, due to lower lithium prices. “To further reinforce the balance sheet, prudent steps were undertaken to further preserve capital including the decision to withhold any interim dividend payment,” commented Managing Director and CEO Dale Henderson in the earnings release on 22 February. The Pilbara Minerals share price is down 2.3% in the 12 months to 26 February.

Albemarle

The Demand Forecast Downgrade Stock

Albemarle [ALB] has downgraded its 2030 demand forecast amid a slowdown in the electric vehicle (EV) transition in the US and Europe. It’s now expecting 3.3 million tonnes of lithium carbon equivalent will be needed to meet demand, down approximately 10% from its previous forecast of 3.7 million tonnes, according to the Financial Times. Albemarle’s President of Lithium, Eric Norris, told the paper: “Some [EV] models have been delayed, largely out of North America, which is pushing out the length of time of penetration [of EVs] in the US”. The Albemarle share price is down 51.2% over the past 12 months.

Piedmont Lithium

The Operating Costs Stock

Piedmont Lithium [PLL] agreed last week to sell its interest in Sayona Mining [SYA:AX] for approximately $39.4m, in order to strengthen its balance sheet. The sale will have no impact on its 25% interest in Sayona Quebec, which is focused on ramping up lithium production in North America. Earlier in February, Piedmont announced it was cutting 27% of its workforce to reduce operating costs amid declining lithium prices. The Piedmont share price has plunged 80% over the past year.

Ganfeng Lithium

The Profit Warning Stock

Ganfeng Lithium [002460:SZ] issued a profit warning in January “due to the cyclical impact of the lithium industry, the growth rate of terminal demand slowed down, resulting in a significant decrease of the price of lithium salt products”. The miner is expecting net profits for 2023 to have fallen 70–80% to an approximate range of RMB4.2–6.2bn. The Ganfeng share price is down 48.8% over the past year.

SQM

The Startup Investment Stock

SQM [SQM] announced last week that its investment arm, SQM Lithium Ventures, will invest $9.4m in UK start-up Altilium, which is focused on decarbonising automotive supply chains. “This will allow us to add value to the new battery supply chain, while at the same time maintaining sustainable levels of resource consumption, water use and carbon footprint,” said SQM CEO Carlos Diaz in a press release. The SQM share price is down 45.5% in the past year.

Another Way to Invest in Lithium

The Global X Lithium & Battery Tech ETF

The Global X Lithium & Battery Tech ETF [LIT] holds all five stocks as of 23 February. As of 31 January, materials accounts for 46.6% of the portfolio, followed by information technology (19.7%), industrials (18.1%), consumer discretionary (14.1%) and energy (1.5%). The fund is down 30.8% in the past year through 23 February and down 24.2% in the past six months.

The Amplify Lithium & Battery Technology ETF [BATT] holds Albemarle, Ganfeng, Pilbara and SQM as of 26 February. As of 31 December, battery technology and battery components have allocations of 23% and 9% respectively, while EVs account for 20%, nickel 15% and lithium 14%. The fund is down 27.2% in the past year and down 23.4% in the past six months.