A Morgan Stanley report suggesting lithium prices could plummet by 45% by 2021 has hit these three S&P/ASX 200 lithium stocks where it hurts to kick off the week.
Morgan Stanley analysts forecast 2018 to be the "last year of global market lithium deficit", with surpluses of lithium expected from 2019 onwards – bad news for lithium miners who have been buoyed by a global scramble for lithium for some time.
Galaxy Resources Limited (ASX: GXY)
Share prices in Australian global lithium company Galaxy Resources Limited are down 3.2% to $3.01 at the time of writing after tracking downwards from a January 10 high of $4.46.
Galaxy Resources has lithium production facilities, hard rock mines and brine assets in Australia, Canada and Argentina.
Despite the slide the Galaxy share price is still almost double what it was at the bottom of its 52-week range of $1.52, but it remains to be seen how long it can hold out at this level as bad news circulates for the sector.
Galaxy is expected to release its full-year to December 31 2017 on March 31, which will be hotly anticipated by investors nervous about changing market conditions.
Orocobre Limited (ASX: ORE)
Shares in mineral exploration company Orocobre Limited were down 2.3% to $5.47 at the time of writing, sliding from $6.95 on February 26 after tracking upwards consistently for the last 12-months.
Orocobre has a portfolio of lithium, potash and boron projects and facilities in the Puna region of northern Argentina with its flagship project the Olaroz Project in Jujuy Province.
Orocobre reported a first-half NPAT of US$8.2 million on February 22 up from US$7.4 million on the previous corresponding period, with strong results out of their Olaroz facility.
With solid fundamentals, Orocobre has been asserting itself as a profitable low-cost producer of lithium carbonate, but may be knocked hard by the challenging market conditions forecast for lithium producers.
Pilbara Minerals Ltd (ASX: PLS)
Shares in emerging lithium and tantalum producer Pilbara Minerals Ltd are down 2.6% to 85c per share at the time of writing, but are still more than double that of its 52-week range low of 31c per share.
But despite being able to track upwards in share price for the last 12-months, news that lithium may soon be oversupplied globally could knock Pilbara from its pedestal.
Pilbara Minerals has just secured an $80 million deal with South Korea steel maker POSCO as part of a binding agreement for POSCO to take 80,000t/y of chemical-grade spodumene concentrate from Pilbara Minerals Pilgangoora operation in the Pilbara region of Western Australia.
Pilbara Minerals reported a net loss for the half-year ending December 31, 2017 of $9.97 million, far less than the net loss from the previous corresponding period of $19.20 million, but its hopes will ride on the POSCO deal going forward as overall market demand wanes.
Pilbara is sitting at a market cap of $1.45 billion after being inducted to the S&P/ASX 200 in December 2017.
