Rio Tinto, which is developing a lithium mine in Argentina, is reported to be eyeing its neighbour, ASX-listed Allkem, which reacted with a 43c (3.8%) increase yesterday to $11.76.

Other lithium stocks followed Allkem but moves such as Pilbara Minerals’ rise of 5c on Thursday to $3.99 were largely a result of a report that the collapse in the lithium prices is coming to an end with the Chinese lithium carbonate price up 1.2% on Wednesday.

Offsetting the lithium news was a steep decline in the price of iron ore. This was directly linked to demand from the Chinese steel industry, which has been told by regulators to trim production because steel demand is not as strong as expected.

The overall picture of markets under pressure was dominated by concern in the U.S. about the viability of First Republic Bank which has suffered a 30-day US$102 billion run of withdrawals in what looks to be a repeat of the crisis which claimed Silicon Valley Bank last month.

Across the Atlantic, London’s Financial Times newspaper piled on the anxiety in a story by one of its top writers, Robin Wigglesworth, headlined: “This awfully fragile, no-good rally”, which quoted J.P. Morgan, an investment bank, describing the 8% bounce in the U.S. market since Christmas as “the weakest ever”.

The problem with the U.S. market is that its rise is largely the work of just two technology companies, Apple and Microsoft, driven by speculation that a boom in artificial intelligence is underway.

For Australian investors, something more tangible is affecting share prices and that’s the latest bout of China wobbles, which have collapsed the iron ore price and the share prices of local miners exposed to the steel-making mineral.

A US$1 a tonne rise in the iron ore price to US$107/t in early Thursday trade barely made a dent in the US$14/t drop over the previous week and the US$27/t fall over the previous month.

It was the falling iron ore price which rubbed $2.69 (5.7%) off BHP, which traded down to $44.04. Rio Tinto lost $8.98 (7.5%) to $111.56, and Fortescue Metals Group (FMG) fell by $1.59 (7%) to $20.77.

The outlook is for a continued slide in the iron ore price with Morgan Stanley joining Citi in forecasting a price of US$90/t towards the end of the calendar year.

Both banks acknowledge that Chinese demand for steel-making raw materials had “unravelled” quicker than they had expected.

Locally, the iron ore leaders received mixed reviews this week with FMG still the hardest to forecast as uncertainty reigns over its renewable energy investment strategy.

Macquarie told clients that details on the projects in the renewables business, Fortescue Future Industry, “remain elusive”, maintaining a sell tip and price forecast of $17.

UBS was on the same page with a sell tip and a downgraded future price of $17.70 compared with $19.80 last week. Goldman Sachs damned FMG with the faint praise of a 10c share price forecast to $15.80, while maintaining a sell tip.

Mineral Resources, which reported delays to its lithium projects, copped more mixed reviews with Morgan Stanley telling clients to hold after a price fall this week of $11 (13%) to $71.43 with the bank’s target price $72. Morgans said buy with the price expected to bounce back to $103.

Lithium, as mentioned earlier, is showing signs of a recovery after a 65% price fall over the past 12-months, with the Chinese price uptick complemented for Australian miners of the battery metal by an “own goal” kicked by the government of Chile which has started to travel down the resource nationalisation road.

The two biggest lithium producers in Chile, SQM and Albemarle, have already invested in Australia and are likely to do more here as Chile embarks on a process of self-harm familiar to South America.

After the Allkem and Pilbara moves already cited, lithium news and price moves included:

  • Leo Lithium slipping 1.8c lower to 50c even as CG Capital Markets pushed the boat out with a speculative buy tip and a price forecast of $1.90 as interest grows in its Goulamina project in Mali.
  • Core Lithium was in a different position with a 3c slip to 97c and sell tip from Citi which sees the stock falling to 75c, whereas CG reckons Core will rise to $1.35.
  • Vulcan Energy announced the formation of a joint venture with a chlor-alkali processing specialist at its German lithium and geothermal power project but fell 25c to $5.74.
  • Red Dirt Metals added 2c to 46c after reporting a 90-metre intersection at 0.95% lithium from a depth of 650.8m from drilling at its Mt Ida project in WA, and
  • Ora Banda Mining crept 0.5c higher to 15c after reporting an 11.1m drill hit of 1.28% lithium from a depth of 54m at its Davyhurst project in WA.

Gold rose early in the week as the latest U.S. banking problems sent a shudder through the market, briefly clearing the US2000 an ounce mark before easing back to around US$1975/oz and then resuming the charge back to US$2000/oz.

Alkane Resources was the pick of the gold sector with a rise of 8c to 92c after reporting strong March quarter production from its Tomingley mine in NSW. Bell Potter reckons the stock is heading up to $1.10.

Gold Road was another Bell Potter favourite with the broker tipping a future price of $2.05 after the stock rose this week by 7c to $1.89. UBS is even more optimistic with a price target of $2.35.

Other gold moves included Bellevue, up 2c to $1.42. De Grey, down 1c to $1.64 (with Macquarie sticking to a price target of $1.90), and Northern Star, down 13 to $13.84 after lifting its cost guidance.

Copper stocks were buffeted by a 6% fall in the price of copper to $3.83 a pound, caused largely by the latest round of jitters in China.

Sandfire slipped 38c lower to $6.58 after reporting lower copper production in the March quarter. Aeris lost 9c to 52c and Caravel was 1c weaker at 26c.

Other news and market moves included:

  • Astron added 4.5c to 56c after reporting an upbeat definitive feasibility study into its Donald rare earth and mineral sands project in Victoria.
  • Elementos slipped 0.5c lower to 16c despite growing interest in its Oropesa tin project in Spain. Morgans effectively said the market is missing the point about a global tin shortage, tipping a future share price for Elementos of 70c.
  • Syrah Resources was sold down by a sharp 28c to $1.29 after reporting the definitive feasibility study into its Vidalia graphite processing project in the U.S.
  • Lynas led a weaker rare earth sector with a fall of 7c to $6.53. Hastings was down 20c at 1.99, and RareX was down 0.7c to 5.2c, and
  • Cazaly Resources joined the rush into Canadian lithium with a deal to buy the Carb Lake project, helping the stock rise by 0.3c to 3c, and sparking the occasional burst of brokers singing “Up there, Cazaly!”