The Core Lithium Ltd (ASX: CXO) share price smashed the benchmark in April.
Shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock gained an impressive 14% over the month, easily surpassing the 1.8% gains posted by the ASX 200 in April.
Of course, those gains have all been banked.
The pressing question now is, can the Core Lithium share price continue to outperform in May?
What can ASX 200 investors expect from Core Lithium in May?
As we kick off the second week of May, the Core Lithium share price is up 6.1% so far this month.
That's being driven by a big surge today, with shares up 7.8% at the time of writing. This will be welcomed by shareholders but comes as rather sour news to the host of traders betting against the ASX 200 lithium stock.
Currently short interest in the stock stands at 9%.
And short sellers may get burned beyond today and throughout May as full-scale production at Core Lithium's Finniss Lithium Project looks to be just around the corner.
Atop soon moving into producer territory, the Core Lithium share price could receive some helpful tailwinds from a potential rebound in the lithium price.
As you may know, the lithium carbonate price is down some 75% from the all-time highs reached in November 2022.
But in recent days a growing number of analysts are coming out of the woodwork to forecast a rebound in lithium prices in 2023.
Part of that is related to Chile's plan to nationalise the nation's lithium industry, which could put a crimp on supplies.
Daniel Hynes and Soni Kumari, commodity strategists at ANZ, said Chile's policy will see the government involved in "all new lithium projects".
They also highlighted that the technology required for the nation's push for environmentally friendly processing is "still unproven on a commercial scale".
According to the strategists:
This could delay the delivery of its pipeline of projects. Other producers also have their issues. Increasing resource nationalism, particularly in Africa could limit growth in supply.
A decreased supply from Chile, a top-three global lithium producer, could drive higher prices for the battery critical metal, which in turn should support the Core Lithium share price.
Indeed, research firm Antaike expects lithium carbonate prices to average US$33,828 per tonne this year. While that's less than half the average price recorded last year, it's some 25% above current prices.
Also sounding a bullish note on the outlook for the lithium price is Morgan Stanley.
The broker believes the beaten-down lithium price is at a "turning point".
"China carbonate prices have bounced 30% from their lows, and hydroxide prices have rebounded by 20%," the broker noted this week.
According to Morgan Stanley:
Although China's electric vehicle sales and battery production are back in growth mode after a lacklustre start of the year, cathode and battery cell producers are still not fully back buying in the spot market. But sentiment is clearly improving, and their lithium inventories appear to have eroded.
Core Lithium share price snapshot
The Core Lithium share price is up 3% in 2023 and down 10% over the past 12 months.
Investors who bought shares in the ASX 200 lithium stock two years ago will be sitting on a gain of 315%.
