Liontown Resources (ASX:LTR) shares have plummeted more than 20% on the Australian Securities Exchange (ASX) amid a sluggish lithium market.

The $2.89 billion market capitalisation company’s shares were down to $0.945 as of 1:45pm AEDT.

Liontown today (22 January 2024) announced it has launched a review of the planned expansion and associated ramp-up of its Kathleen Valley Lithium Project in Western Australia to preserve capital and reduce near-term funding requirements for the project.

Shares in Liontown fell after lenders said they will withdraw a loan offered just 3 months ago, which. led to the company to announce a slower expansion of Kathleen Valley.

The review has been brought about in light of the material decline in spodumene prices.

Despite the review, Liontown says Kathleen Valley remains on track for first production in the middle of this year.

As per Trading Economics, lithium carbonate prices have plummeted 80% since January 2023, however prices have stabilised to just under US$13,300 per tonne as of 19 January 2024.

Liontown is but one of the ASX-listed lithium miners feeling the pinch in what has been described as the second down cycle, as reported by Mining.com.au.

Critical minerals and lithium-focused explorer Lightning Minerals (ASX:L1M) has witnessed a more than 13% fall in its shares to $0.100 since trading opened this morning.

Loyal Lithium (ASX:LLI) also plummeted 13% on the ASX and is sitting at $0.270.

Mining.com.au reported earlier this month (19 January 2024) Loyal Lithium had flagged a ‘major’ discovery from the first drillhole assays at its Trieste Lithium Project in Quebec, Canada.

Hard rock lithium explorer Patriot Battery Metals (ASX:PMT) is trading 10% lower today with its shares now at $0.700.

Earlier this month Patriot Battery Metals began what has been described as Quebec’s current largest lithium drilling program across its Corvette Property, as reported by this news service.

The state of the lithium market has largely been caused by oversupplied markets in Asia, and the slowing adoption rate of electric vehicles (EVs).

However, industry experts and government officials polled by Mining.com.au, are in agreement that a revival in the lithium market is looming.

Astute Metals Executive Director Matt Healy told this news service earlier this month Astute remains confident in the underlying longer-term demand fundamentals of the lithium market.

“There seems to be some indication that we will see a reversal of the trend at some point in 2024, and a number of well-informed market commentators are aligned in this view.

We are confident of the underlying longer-term demand fundamentals of the lithium market, driven by EV demand.”

According to Trading Economics, EV sales pessimism in China limited lithium demand for battery manufacturers, driving factories to miss their typical restocking season.

Instead, companies took advantage of high inventories following the supply glut caused by extensive subsidies from Beijing throughout 2021 and 2022.

EV battery sales also plateaued in the US, limiting lithium bidding as inventories remained high. Trading Economics notes the developments drove key market players to forecast the next lithium deficit to return only in 2028.

UBS says previous investments in increasing supply may actually drive global carbonate equivalent supply to rise by 40% this year, further deepening the ongoing surplus.

Write to Adam Drought at Mining.com.au

Images: Liontown Resources