If you've invested in ASX lithium shares, or are just keeping an eye on them, you'll have noticed a good bit of volatility in the sector.
That's because lithium stocks tend to see big moves not just from changes in the spot price of lithium, but also from regularly shifting forecasts for the pricing outlook.
And those forecasts have varied widely over the past year.
As for the spot market, lithium prices are down some 80% from the November 2022 highs. And over the shorter term, there's unlikely to be a rapid rebound.
Despite some producers, like Core Lithium Ltd (ASX: CXO), suspending mining operations amid the depressed prices, global supply growth looks like it will continue to exceed demand growth over the coming months. Especially with EV sales growth rates in the United States and China slowing markedly.
Which brings us to two ASX lithium shares that Blackwattle Investment Partners analysts Robert Hawkesford and Daniel Broeren "are well placed to ride out near-term volatility in the lithium price".
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Two ASX lithium shares to weather the storm
As Blackwattle notes:
Lithium stocks had a challenging start to January as former Small Ords member, Liontown Resources Ltd (ASX: LTR), reported that its major funding partner had pulled a $760 million debt package over concerns of project sustainability.
That added more unwanted volatility to the sector.
Rescinding the debt package, Hawkesford and Broeren said, "resulted in the sell-down of shares for all lithium developers still in need of capital".
But the analysts cite a crucial difference between Liontown and small-cap ASX lithium shares Patriot Lithium Ltd (ASX: PAT) and Latin Resources Ltd (ASX: LRS).
According to Blackwattle:
An important distinction, however, is that while Liontown has a large resource asset, it is a complex and high-cost project at around US$750/ton. This compares to Latin Resources, for example, with a proposed cost base closer to US$540/ton.
In our view projects with superior economics like Latin Resources and Patriot Metals are well placed to ride out near-term volatility in the lithium price.
For the three months ending 31 December, Latin Resources reported a 41% increase to the Colina Deposit Mineral Resource Estimate (MRE) at its Salinas Lithium Project, located in Brazil. The MRE now totals 63.5 million tonnes at 1.3% Li2O.
Patriot reported its quarterly results on 30 January.
Over the three months, the microcap ASX lithium share completed its Phase 3 exploration program at its Gorman Project, located in Canada.
The miner noted that Gorman is along trend and 68 kilometres from Frontier Lithium's (CVE: FL) PAK-Spark Lithium Project. This counts among the largest, highest-grade lithium deposits in North America with a resource of 58.5 million tonnes.
