Lithium stocks finish turbulent week on a high note; Stellantis backs Vulcan at massive premium

Fri 24 Jun 22, 2:15pm (AEST)
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Key Points

  • Most mid-cap lithium stocks bounced at least 10% on Friday
  • Vulcan has received a direct equity stake from offtake partner Stellantis
  • Pilbara Minerals surprised the market earlier this week with another record auction result

Lithium stocks will finish a volatile week on a more positive note as buyers step up to lift share prices from fresh year-to-date lows.

Most ASX-listed lithium stocks are up double digit percentage points around noon, headlined by beaten-up names including:

Towards the large end of town, Pilbara Minerals (ASX: PLS) and Allkem (ASX: AKE) are up between 4-7%.

Vulcan: A beacon of hope

Stellantis - a multinational automotive manufacturer bearing 16 brands including Chrysler, Fiat, Jeep and Peugeot - might be one of the first autos to take a direct equity stake in an ASX-listed lithium producer. 

Vulcan announced that Stellantis will become the company’s second largest shareholder, at 8% shareholding, after a $76m equity investment. 

Perhaps what's most interesting is that Stellantis bought its new shareholding at $6.62 per share - a 32% premium to Vulcan’s last close of $5.00.

To have a top-tier automaker such as Stellantis make an equity investment at such an outsized premium, is no doubt a massive vote of confidence for Vulcan and potentially the broader lithium sector.

Lithium prices continue to surprise

Earlier this week, Pilbara Minerals surprised the market with its latest spodumene auction results. This time, accepting a pre-auction spot offer for 5,000 mt at US$6,350 a tonne.

Market sources told S&P Global Platts that tight spodumene supply is likely to persist through the rest of 2022, which “meant that prices could continue to climb higher.”

Though, “strong downstream resistance was likely to limit the upside for spodumene prices moving forward.”

A producer commented on current pricing conditions, saying that “this price is too high and unsustainable; I’m not sure how converters and battery makers are going to make profits.”

Regardless of where lithium prices might be in the medium-to-long term, current producers like Pilbara Minerals, Allkem and Mineral Resources (ASX: MIN) will be able to take advantage of today's high prices.

More is needed

For most lithium stocks, Friday represents a small bounce in the face of a massive downtrend.

Vulcan is still down -21% in June, even after today's 30% rally.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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