Orocobre Share Price Down over 40% in 12 months: Lithium Disappoints

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At time of writing, the share price of Orocobre Limited [ASX:ORE] is down 0.53%, trading at $2.825.

It has been a difficult 12 months for the Orocobre share price, which is down more than 40% in the last 12 months:

ASX ORE Orocobre Share Price

Source: tradingview.com

In Orocobre’s latest quarterly report, the company outlined reduced production and soft lithium prices. While demand for lithium is still projected by Orocobre to pick up, we’ll discuss an alternative battery metal that has a firmer spot price.

Orocobre share price sinks on quarterly report

The quarterly report was released before the market opened and Orocobre shares fell on commencement of trading.

Here are some key points from the report:

  • Q4 production of 3,455 tonnes down 4% on previous corresponding period (due in part to slightly lower than average evaporation rates)
  • Production for year up to a record 12,605 tonnes
  • Q4 sales revenue of US$27.8 million, down 17% Quarter-on-Quarter
  • Sales volume for quarter down 4% to 3,387 tonnes
  • Gross cash margins (excluding export tax) of US$3,727 a tonne down 29%
  • Available cash of $248 million
  • Focus on ‘brine quality’

So a slightly difficult quarter for Orocobre, which was consistent with what other lithium players like Galaxy Resources Limited [ASX:GXY] have been experiencing recently.

The company had this to say about the state of the lithium market:

Orocobre maintains the view that recent softness in the lithium market is the result of industry and macro dynamics which are taking longer than anticipated to correct.

They still expect demand to increase in the range of 17–20% CAGR between 2018 and 2025.

But lithium stocks have been struggling this year.

For example, the popular Global X Lithium and Battery Tech ETF (LIT) is down around 16% in the last 12 months.

It is possible some lithium investors may be sick of the frustrating wait.

One battery metal with a more promising spot price

The amount of nickel in the two most commonly used lithium ion battery chemistry is more than you would think.

The cathodes of two common Li-ion battery types, NCA and NMC batteries are 80% and 33% nickel respectively.

The Nickel Institute claims that while 39% of Li-ion batteries contain nickel at the moment, it expects this number to hit 58% by 2025.

What’s more, the two-month spot price of nickel looks thoroughly bullish to us:

Nickel Price Chart

Source: kitcometals.com

Something to consider if you are thinking about investing in the metals behind the electric vehicle boom.

If this has piqued your interest, make sure to read our free nickel stocks report. It looks at nickel’s potential role in the EV boom, as well as looks at well-positioned nickel stocks.

Regards,

Lachlann Tierney,

For Money Morning

 

 

About Lachlann Tierney

Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest…

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