Source AFR...Themost shorted stock on the ASX, lithium producer...

Source AFR...

Themost shorted stock on the ASX, lithium producer Galaxy Resources, says it isbeing targeted as part of a broad bet against battery minerals producers ratherthan because of any specific concerns with its corporate strategy.

Thecomments come as several members of Australia's besieged battery mineralssector prepare to update the market this week, with lithiumexporter Pilbara Minerals and graphiteproducer Syrah Resourcesexpected to reveal their latest pricing data on Monday.

Galaxylast week eclipsed Syrah as the local bourse's most shorted stock, with morethan 17 per cent of its register betting that a 65 per cent share price slideover the past 15 months has further to run.

Galaxyis profitable, has no debt and more than $US285 million ($406 million) of cashon hand, but isyet to clarify how it will fund development of its next lithium project, whichis expected to cost $US474 million.

Askedwhether it had received feedback from shareholders as to why they were lendingtheir securities to short sellers, Galaxy said its status as one of the biggestpure-play lithium stocks on the ASX was making it a target.

"Webelieve Galaxy is hit hardest because we have a highly institutionalisedregister that makes borrowing stock easier. We also have the highest liquidityof any of the producers making getting in and out of a position easier,"said Galaxy in a statement.

"Thepure play lithium names are hit hardest and we believe that the shorting isbased around current lithium pricing China, not anything to do with the companyitself."

Rivallithium producer Orocobre is the eighth most shorted stock on the ASX whilePilbara Minerals is ranked 15th, according to shortman.com.

Unlikecopper or gold, there is no single global price for lithium, with geography andthe chemical state of the lithium product all affecting price.

Lithium producers have beenreporting sequentially lower received prices for several quarters now, while the most severe falls have been seen in Chinese spot prices for battery grade lithium carbonate, which have virtually halved since they peaked at almost $US22,000 per tonne in the final three months of 2017.

Pricesfor battery-grade lithium hydroxide in China have fallen by closer to 37 percent since peaking above $US20,000 per tonne in early 2018.

Theprice falls have been blamed on several factors, including changes to Chinesegovernment subsidies for electric vehicles, which need lithium for theirbatteries.

Thefalls have also coincided with a dramaticincrease in supply of lithium-rich spodumene concentrate from Australian mines.

Bankingsources say Australia's battery minerals producers have also suffered becauseof unrealistic pricing expectations created by commercial agencies that collectand publish commodity price information.

Somesenior players in the industry believe index prices for small, concentrated andopaque markets like lithium and graphite are often unrealistic and based onsmall amounts of information, leading investors to be disappointed whenproducers report their actual received prices.

Theissue has been particularly acute for Syrah, whose Mozambique graphite wasexpected to earn a premium over the graphite prices published by agencies, buthas instead tended to receive a discount during its first year of operation.

Roskillanalyst Robert Baylis correctlycalled the peak in lithium prices in January 2018, and said Chinese demand had been soft in recent months.

"Wesee demand for battery raw materials across the board in China having been weaksince mid-2018, but consumption [is] still strong, pointing to over-capacityand stock-building in 2018, creating more price pressure," he said lastweek.