Why ASX lithium stocks could run on China's BIG move

After a strong month, can China help ASX lithium shares deliver longer-term outsized gains?

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX lithium shares have broadly enjoyed a strong rebound over the past month.

And shareholders owe much of those welcome gains to the new fiscal and monetary stimulus measures announced by China's government and central bank in recent weeks.

To give you some idea, here's how these Aussie lithium miners have tracked over the past month, a period that's seen the All Ordinaries Index (ASX: XAO) gain 2.4%:

  • Core Lithium Ltd (ASX: CXO) shares are up 17.0%
  • IGO Ltd (ASX: IGO) shares are up 3.3%
  • Liontown Resources Ltd (ASX: LTR) shares are up 25.4%
  • Sayona Mining Ltd (ASX: SYA) shares are up 60.0%
  • Lake Resources (ASX: LKE) shares are up 30.0%
  • Mineral Resources Ltd (ASX: MIN) shares are up 31.8%
  • Pilbara Minerals Ltd (ASX: PLS) shares are up 0.4%

Now, the latest stimulus announcement out of China on Saturday looks to have underwhelmed investor expectations.

However, in potentially good news for ASX lithium shares, Chinese officials indicated more support measures may be forthcoming in the weeks ahead.

And according to Janus Henderson's Darko Kuzmanovic, it won't be ASX iron ore or coal miners that benefit the most from any big boosts to Chinese stimulus measures, but rather those miners focused on battery and technology-related metals.

Why ASX lithium shares could be set for better days

"Markets are used to stimulus that drives demand for iron ore and coal through industrial activity and infrastructure development, but I doubt that will happen at the level it has in the past," Kuzmanovic said (courtesy of The Australian Financial Review).

Rather, the fund manager expects ASX lithium shares and copper miners could reap some of the bigger rewards.

Kuzmanovic explained:

China is undertaking a shift away from urbanisation spend to higher-value manufacturing, which you can see in its battery manufacturing for electric vehicles and building its own superconductor chips – so it's deploying more innovation technology to its next phase of economic growth.

The implications of that are bulk commodities like iron ore won't have the demand they've had in the past, but things like copper, nickel and other battery materials will have demand drivers going forward.

Commenting on ASX lithium shares, he said much of the pain has come amid the ongoing global oversupply of the battery-critical metal.

"Lithium stocks look oversold, and we're seeing a bottom as far as the commodity prices is concerned," he said.

Kuzmanovic added:

The issue isn't demand, that's actually pretty solid, it's really the short-term oversupply – there's just too much capacity coming up. We think the thesis for lithium and the EV transition is still there, it's just been delayed a little bit.

Should you invest $1,000 in Magellan Financial Group right now?

Before you buy Magellan Financial Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Magellan Financial Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

More on Materials Shares

A lion dressed in a business suit roars as two sheep sit awkwardly at the boardroom table.
Materials Shares

Liontown share price roars higher on half year results

This lithium miner has handed in its report card on Friday.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

The Rio Tinto share price 'remains undervalued' and could rise 20%+

Goldman Sachs thinks this mining giant is being undervalued by the market.

Read more »

Ecstatic man giving a fist pump in an office hallway.
Materials Shares

Core Lithium shares jumps 7% on golden announcement

This lithium miner could be sitting atop a large gold system.

Read more »

a man holds his arms out and shrugs his shoulders as if indicating he doesn't know the answer to a question he's been asked.
Materials Shares

Why is this ASX 200 mining stock crashing 28% today?

Investors are rushing to the exits in large number. But why?

Read more »

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Here's the lithium price forecast through to 2028

Will lithium prices be recovering any time soon? Let's find out.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Materials Shares

Why is the BHP share price falling today?

Today's decline could actually be good news for the miner's shareholders.

Read more »

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Materials Shares

Pilbara Minerals shares crashed 17% in February: Is this a buying opportunity?

Do analysts think that now is a good time to buy this lithium giant's shares? Let's find out.

Read more »

Business people discussing project on digital tablet.
Materials Shares

After a 5% price drop on its 2024 results, should I buy shares in this ASX 200 heavyweight?

Is now a good time to put money into this giant's shares? Let's find out.

Read more »