Unfortunately for its long-suffering shareholders, the Orocobre Limited (ASX: ORE) share price has continued its poor run and sunk lower once again on Tuesday.
At one stage the lithium miner's shares were down 5% to a 52-week low of $2.91. They have since recovered slightly but are still down 3.5% to $2.96 at the time of writing.
This latest decline means that the Orocobre share price has lost a massive 57% of its value over the last 12 months.
Why is the Orocobre share price sinking lower today?
This morning Orocobre announced that its Olaroz Lithium Facility in Argentina has been impacted by unfavourable weather conditions.
According to the release, after completing an internal review of expected production for the remainder of the financial year, management has noted that recent rainfall has led to its brine feedstock being diluted. This is a key input in the production process.
As a result of this dilution, the company has been forced to downgrade its production guidance for FY 2019.
This time last month the company reiterated its guidance for full year production to be higher than that achieved in FY 2018, whereas now management expects it to be in line with last year's production.
Should you buy the dip?
While Orocobre and fellow lithium miner peers Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS) are arguably trading at attractive levels after recent pullbacks, I wouldn't be a buyer of their shares until lithium prices have improved meaningfully and then been sustained.
Prices fell heavily in 2018 due largely to increasing supply and softening demand in the key China market. Orocobre, for example, recorded an average price received of US$10,587 per tonne in the December quarter, down 28% on the previous quarter.
Unfortunately, prices have continued to weaken so far in 2019, which I fear could weigh on the share prices of the lithium miners in the coming months.
