Why are Pilbara Minerals and ASX lithium shares getting hammered today?

The outlook for lithium could be challenged according to one leading broker.

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The market may be falling today but one group of shares is tumbling more than most – ASX lithium shares.

The battery materials industry is a sea of red on Thursday morning, with heavy declines being printed from lithium miners, explorers, and developers.

Here's a quick summary of how a handful of ASX lithium shares are performing this morning:

  • The Allkem Ltd (ASX: AKE) share price is down 4% to $11.29.
  • The Azure Minerals Ltd (ASX: AZS) share price is 3.5% to $2.41.
  • The Core Lithium Ltd (ASX: CXO) share price is down 3% to 34.5 cents.
  • The Pilbara Minerals Ltd (ASX: PLS) share price is down 5% to $3.87.
  • The Sayona Mining Ltd (ASX: SYA) share price is down 3.5% to 8.4 cents

Why are ASX lithium shares being sold off?

Investors have been hitting the sell button today following a particularly poor night of trade for their peers on Wall Street.

For example, lithium giant Albemarle Corp (NYSE: ALB), Livent Corp (NYSE: LTHM), and Sociedad Quimica y Minr de Chile SA (NYSE: SQM) ended the session down approximately 10%, 8%, and 7%, respectively.

This was driven largely by a broker note out of Bank of America which revealed that its analysts believe that the outlook for lithium is challenged. So much so, they expect the lithium market to be oversupplied in both 2024 and 2025.

This could mean a tough couple of years for lithium miners if prices of the battery-making ingredient come tumbling down. It also calls into question the valuations of some of the smaller developers that may have based their studies on higher assumed prices.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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