Monsters of Rock: Lithium players survive contagion in Core fallout as Materials enter Xmas on a win

Big lithium miners hold firm as impacts of lithium price rout hits home
Core Lithium’s ~20% fall has had an uneven impact on other lithium stocks
Materials sector heads into Christmas up almost 8% for the year, with gold equities ~25% higher YTD

The major lithium stocks will head into Christmas with just a hint of wind in their sails, avoiding contagion from news Core Lithium (ASX:CXO) will have to curtail production and development at its Finniss lithium project in the NT.

READ: Ground Breakers: The lithium price rut hits home as Core sinks on Finniss update

The only spodumene producer outside WA will continue to rely on stockpiles but has flagged a wind back of mining operations and paused a $50 million spend on early works at the BP33 underground mine to tighten the belt with spodumene prices recently falling below its apparent cost of production.

Market observers are now waiting to see if the news is a harbinger of worse still to come or a floor in the most recent cycle of the volatile battery metal – which only emerged from a ‘winter’ in 2018-2020 to surge to astonishing record prices last year.

Having run up from around US$500/t to over US$8000/t between 2020 and 2022, prices have fallen 80% this year to around US$1100/t.

Has this sent jitters through the broader market, where a number of the top stocks are heavily shorted?

Not yet.

Lithium Plus Minerals (ASX:LPM), which reported a high grade maiden resource of 4.1Mt at 1.43% Li2O near Core’s Finniss project just three days ago, was down ~10%.

But major players Pilbara Minerals (ASX:PLS) and Mineral Resources (ASX:MIN) were among the top stocks on the ASX today, joining all time high climbing iron ore producer Fortescue (ASX:FMG) and EV metals compatriot Lynas Rare Earths (ASX:LYC).

$830m capped explorer Wildcat (WC8) and next cab off the rank Liontown (ASX:LTR), the latter aiming to have its 500,000tpa Kathleen Valley mine up and running by mid-2024, were off slightly.

Sayona Mining (ASX:SYA) however, a Canadian producer with a similar production profile to Core, was down over 8.5% on high trading volumes.

Equities defy bearishness on commodities to enter Xmas up

While falling lithium prices and weakness across other industrial and battery metals like nickel and copper have driven concerns about mining stocks in 2023, as Christmas approaches the Materials sector is sitting on a near 8% 12-month gain.

That has been helped by surprisingly strong iron ore prices, trading at upwards of US$138/t today and fuelling big price runs for BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Fortescue.

The latter hit an ATH of $28.35 today.

Gold miners have also performed well with war and economic uncertainty pairing with hopes of rate cuts in 2024 to keep prices near record levels.

ASX gold equities are up around 25% YTD as a group, at least on the production side.