Metals

What’s the outlook for ASX battery metals shares in Q2?

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The battery metals trade is showing no signs of exhaustion in the second quarter of FY23. The basket’s lead child, lithium, continues to set new all-time highs, which is helping to boost ASX shares in this space.

At the time of writing, lithium carbonate futures are priced at A$115,105.09 per tonne, their highest mark on record.

This continues an extensive period of upside for the key battery ingredient whereby prices have curled up from previous lows (if you’d even call it that) in May and surpassed previous highs in late September.

Meanwhile, nickel and cobalt – two other key battery metals – have consolidated heavily over the past six to nine months and now trade just above yearly lows.

All three are seen on the chart below from September 2021 to date.

TradingView Chart

What’s next for ASX shares in this segment?

Along with the upswing in long-term lithium pricing have come numerous new entrants in the lithium sphere.

Various companies now have exposure to lithium exploration and a handful to the processing and production of battery-grade product.

Several more are on the quest to do so. The point is, there are numerous ASX shares in the battery metals space that sit at selective points along the chain.

First are the miners, then those involved in the distribution and refining processes, and then the more tech-based players that are innovating in the space, to name a few.

Key lithium players Pilbara Minerals Ltd (ASX: PLS), Lake Resources NL (ASX: LKE) and Core Lithium Ltd (ASX: CXO) have been star performers on the ASX this year.

There are also those at the larger end of town, including IGO Ltd (ASX: IGO) and the large players involved in nickel and cobalt extraction, like Cobalt Blue Holdings Ltd (ASX: COB).

What do the brokers say?

Understanding the returns of this broad range of ASX shares gives unique insights into the performance of the industry.

How about looking ahead, though? According to Refinitiv Eikon data, sentiment across the sector looks to be bullish, with many of the names above tipped to continue upwards.

For the most part, the ASX shares above are each rated a buy, suggesting that analysts are still constructive on the battery metals segment – within this basket, at least.

Name Buy / total Consensus Price Target From Current price
Pilbara Minerals Ltd   3 from 10  $3.93 -16.2%
Core Lithium Ltd   3 from3   $1.60 38.5%
Lake Resources NL  5 from 5  $2.43 149.2%
IGO Ltd   11 from 14  $14.12 -7.8%
Cobalt Blue Ltd  1 from 1   $1.10 59.4%

The share prices of the above group are tipped to grow at around 44% on average over the next 12 months. However, that’s a long time in the current economic climate.

Of particular note is Lake Resources, with tremendous upside yet to be priced in, brokers say.

In the meantime, time will tell on the next moves for ASX battery metals shares. Key to the debate is the price of lithium, which is showing no signs of slowing just yet.

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