Oversupply fears have seen investors flee from lithium stocks this year, but “some sun is beginning to poke through the clouds” according to a report published by Seeking Alpha.

About 75 per cent of the ASX’s 100-or-so lithium stocks have slumped between 2 per cent and 90 per cent in the past six months (see table below). And key lithium stocks have seen further falls this month.

There are three key reasons for the slump, according to the Smart Dividend Stocks report published by Seeking Alpha:

— “Out-of-control” valuations

— China’s decision to cut back on subsidies for vehicles with a driving range of fewer than 300km

— Capacity expansions in Chile and new supply coming online in Australia flooding the market

Looking ahead, however, oversupply fears could ease as demand increases from electric car and battery makers.

“Today global production is sub-250,000 tonnes and by 2025 most analysts estimate we’ll be needing at least 750,000 tonnes,” the report says.

“Every year that analyst number has been moving higher — just a few years ago consensus 2025 demand was closer to 400,000 tonnes.

“Some are predicting the market will be as big as 1 million tonnes by 2025… And we can see it will need to be about twice as big just five years later.”

Still, new supply should take care of even that level of demand.

Major lithium producers Albemarle and SQM are expanding production and Pilbara Minerals (ASX:PLS) recently brought its massive Pilgangoora lithium and tantalum project in Western Australia’s Pilbara region into production.

Altura Mining (ASX:AJM) has also started producing lithium concentrate from its mine, also in the Pilbara.

New production is expected to force supply up from around 1.1 million tonnes in FY18 to over 3 million tonnes in FY19.

However, we may see a bottleneck as China scrambles to ramp up its conversion capacity, according to Chris Reed, the boss of junior lithium producer Neometals (ASX:NMT).

“The bottleneck will be in China in terms of their conversion capacity,” he told Stockhead.

“You’ve got the biggest expansion in the lithium business in its history, in terms of batteries, converting plants, all that sort of stuff. I think there is probably a disconnect.”

With valuations of lithium stocks falling back to earth, that could mean opportunities may be ready to emerge.

Here’s a list of ASX stocks with exposure to lithium courtesy of leading ASX data provider MakCorp: (Prices from August 14)

ASX code Company 6-month price change 12-month price change Price Aug 14 (intraday) Market Cap
DMI DEMPSEY MINERALS 1.59090909091 4.7 0.285 27.1M
GWR GWR GROUP 1.35714285714 1.75 0.165 41.7M
AGO ATLAS IRON 0.653846153846 1.26315789474 0.043 404.0M
DEG DE GREY MINING 0.48 3.625 0.185 67.1M
HWK HAWKSTONE MINING 0.458333333333 1.5 0.035 11.0M
TAR TARUGA MINERALS 0.444444444444 1.36363636364 0.13 17.7M
AVL AUSTRALIAN VANAD 0.4 3 0.056 87.2M
ESR ESTRELLA RESOURC 0.3 0.04 0.026 12.3M
BSM BASS METALS 0.285714285714 1.45454545455 0.027 66.4M
ENT ENTERPRISE METAL 0.266666666667 0 0.019 7.3M
ARE ARGONAUT RESOURC 0.190476190476 2.125 0.025 38.9M
WKT WALKABOUT RESOUR 0.185567010309 0.597222222222 0.115 31.2M
ZNC ZENITH MINERALS 0.125 0.875 0.18 38.3M
LI3 LITHIUM CONSOLID 0.12 0.0769230769231 0.14 12.7M
KSN KINGSTON RESOURC 0.0909090909091 0.6 0.024 29.4M
VMC VENUS METALS COR 0.0869565217391 0.136363636364 0.125 10.9M
LCD LATITUDE CONSOLI 0.08 0.928571428571 0.027 7.4M
ZEU ZEUS RESOURCES L 0.0769230769231 0.4 0.014 2.5M
PLS PILBARA MINERALS 0.0359281437126 1.21794871795 0.865 1.5B
PLL PIEDMONT LITHIUM 0 0.752577319588 0.17 95.1M
ADN ANDROMEDA METALS 0 0.75 0.007 7.0M
MLS METALS AUSTRALIA 0 0.666666666667 0.005 11.7M
MZN MARINDI METALS L 0 0.428571428571 0.01 17.8M
IEC INTRA ENERGY COR 0 0.0833333333333 0.013 5.0M
MXR MAXIMUS RESOURCE 0 -0.5 0.001 3.2M
KLH KALIA 0 -0.529411764706 0.008 20.1M
KAI KAIROS MINERALS -0.0277777777778 1.33333333333 0.035 29.3M
MZZ MATADOR MINING -0.0294117647059 0.736842105263 0.33 17.8M
KOR KORAB RESOURCES -0.0357142857143 0.5 0.027 8.2M
AOU AUROCH MINERALS -0.047619047619 -0.333333333333 0.1 9.9M
CAZ CAZALY RESOURCES -0.0512820512821 -0.0263157894737 0.037 8.5M
DGR DGR GLOBAL -0.054347826087 -0.304 0.087 53.3M
RIO RIO TINTO -0.0594498669033 0.169977924945 74.2 117.5B
BAU BAUXITE RESOURCE -0.0655737704918 -0.208333333333 0.057 12.2M
NLI NOVO LITIO -0.0769230769231 0.142857142857 0.048 17.9M
ARM AURORA MINERALS -0.0882352941176 -0.354166666667 0.031 3.6M
POS POSEIDON NICKEL -0.093023255814 0.772727272727 0.039 43.5M
EUR EUROPEAN LITHIUM -0.0952380952381 3.22222222222 0.19 103.7M
EMH EUROPEAN METALS -0.108695652174 -0.4875 0.41 58.0M
TRT TODD RIVER RESOU -0.111111111111 0.0434782608696 0.12 9.2M
AEE AURA ENERGY -0.130434782609 -0.130434782609 0.02 21.4M
VXR VENTUREX RESOURC -0.133333333333 0.857142857143 0.013 46.8M
SI6 SIX SIGMA METALS -0.153846153846 -0.0833333333333 0.011 5.0M
ORN ORION MINERALS L -0.155555555556 0.727272727273 0.038 56.3M
CXO CORE EXPLORATION -0.15625 -0.217391304348 0.054 34.2M
HNR HANNANS -0.181818181818 0.285714285714 0.018 35.6M
TAW TAWANA RESOURCES -0.196035242291 0.644144144144 0.365 211.0M
DTM DART MINING NL -0.2 1 0.008 6.9M
SEI SPECIALITY METAL -0.2 1.5 0.02 11.1M
GXY GALAXY RESOURCES -0.200598802395 0.412698412698 2.67 1.1B
AGY ARGOSY MINERALS -0.202898550725 2.3950617284 0.275 248.0M
SRK STRIKE RESOURCES -0.205882352941 0.255813953488 0.054 7.8M
VMS VENTURE MINERALS -0.212121212121 0.04 0.026 13.5M
BGS BIRIMIAN -0.213483146067 0.458333333333 0.35 84.1M
KTA KRAKATOA RESOURC -0.222222222222 0.0294117647059 0.035 4.1M
PM1 PURE MINERALS -0.222222222222 -0.391304347826 0.014 4.4M
MIN MINERAL RESOURCE -0.225708502024 0.125 15.3 2.9B
NMT NEOMETALS -0.233766233766 0.0172413793103 0.295 160.5M
CMC CHINA MAGNESIUM -0.24 0.117647058824 0.019 6.0M
LTR LIONTOWN RESOURC -0.243243243243 2.11111111111 0.028 30.9M
AJM ALTURA MINING -0.25 0.588235294118 0.27 491.4M
DEV DEVEX RESOURCES -0.25 0.2 0.006 6.6M
PIO PIONEER RESOURCE -0.285714285714 0.176470588235 0.02 29.0M
TKM TREK METALS -0.285714285714 -0.259259259259 0.02 6.2M
CHK COHIBA MINERALS -0.3 -0.363636363636 0.007 3.9M
GSC GLOBAL GEOSCIENC -0.333333333333 0.333333333333 0.26 382.1M
LKE LAKE RESOURCES -0.333333333333 1.25 0.09 28.9M
SUH SOUTHERN HEMISPH -0.340659340659 -0.259259259259 0.06 5.1M
LPI LITHIUM POWER IN -0.345238095238 -0.0833333333333 0.275 71.7M
NVA NOVA MINERALS -0.351351351351 3 0.024 18.4M
MQR MARQUEE RESOURCE -0.3625 0.545454545455 0.255 10.9M
KDR KIDMAN RESOURCES -0.370165745856 0.932203389831 1.14 455.5M
LIT LITHIUM AUSTRALI -0.371428571429 -0.0833333333333 0.11 47.9M
MTC METALSTECH -0.38064516129 -0.36 0.096 11.1M
ORE OROCOBRE -0.381736526946 0.342216444589 4.13 1.1B
PSM PENINSULA MINES -0.384615384615 -0.619047619048 0.008 5.7M
SCI SILVER CITY MINE -0.391304347826 0.166666666667 0.028 6.9M
DHR DARK HORSE RESOU -0.4 2 0.012 23.1M
BMT BERKUT MINERALS -0.405405405405 -0.56862745098 0.11 6.0M
SYA SAYONA MINING -0.40625 1.92307692308 0.038 65.2M
THR THOR MINING-CDI -0.416666666667 1.1875 0.035 22.9M
PSC PROSPECT RESOURC -0.416666666667 -0.0344827586207 0.028 55.5M
ADV ARDIDEN -0.421052631579 -0.388888888889 0.011 18.4M
MCT METALICITY -0.428571428571 -0.473684210526 0.02 11.6M
OAR OAKDALERESOURCES -0.428571428571 -0.6 0.02 1.3M
BOA BOADICEA RESOURC -0.441860465116 -0.04 0.12 6.3M
ASN ANSON RESOURCES -0.447368421053 9.5 0.105 48.7M
INF INFINITY LITHIUM -0.471428571429 -0.564705882353 0.074 14.1M
CFE CAPE LAMBERT RES -0.481481481481 0.272727272727 0.028 28.3M
TKL TRAKA RESOURCES -0.492307692308 0.736842105263 0.033 10.9M
LRS LATIN RESOURCES -0.5 0.5 0.006 16.7M
CUL CULLEN RES -0.5 0 0.001 2.6M
4CE FORCE COMMODITIE -0.5 -0.0952380952381 0.038 16.5M
MOX MONAX MINING -0.5 -0.4 0.003 2.2M
LPD LEPIDICO -0.509433962264 1 0.026 76.1M
AMD ARROW MINERALS L -0.536585365854 -0.269230769231 0.019 5.8M
CGM COUGAR METALS NL -0.555555555556 -0.428571428571 0.004 3.7M
CAS CRUSADER RESOURC -0.59375 -0.773913043478 0.026 13.6M
AVZ AVZ MINERALS -0.62962962963 0.0989010989011 0.1 187.0M
MTH MITHRIL RESOURCE -0.636363636364 -0.542857142857 0.016 3.2M
CAD CAENEUS MINERALS -0.666666666667 -0.666666666667 0.001 12.9M
N27 NORTHERN COBALT (listed 2017) -0.682926829268 -0.35 0.13 6.6M
PNN PEPINNINI LITHIU -0.685714285714 -0.352941176471 0.011 6.4M
RLC REEDY LAGOON -0.707317073171 -0.294117647059 0.012 4.8M
GPP GREENPOWER ENERG -0.733333333333 -0.75 0.004 5.8M
WML WOOMERA MINING L -0.901 -0.901 0.099 11.2M