Chinese producers are hungry for lithium, pushing prices to an all-time high
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The Pilbara Minerals Ltd (ASX: PLS) share price is trading slightly lower on Thursday. It was up in early trade but at the time of writing is down 0.47% to $2.14.
Shares in the largest ASX-listed lithium player have been trading sideways since early August, likely stalled by profit-taking and broader market volatility.
After all, the Pilbara Minerals share price is up 150% year-to-date and up more than 580% in the past 12 months.
While Pilbara Minerals might continue to consolidate around the low $2 level, lithium spot prices have continued to climb.
Chinese lithium prices mark fresh record highs
China’s lithium carbonate prices continued to trend higher as buyers returned from the country’s national two-day Mid-Autumn Festival holidays.
Market participants said there was “limited trading liquidity, with produces prioritising negotiating their term contracts with existing customers for October delivery”, according to S&P Global.
A modest pullback for the Pilbara Minerals share price
Pilbara Minerals is down about 15% from its all-time high of $2.53 on 15 September. That said, its shares have found plenty of buying support around the $2 level.
The Pilbara Minerals share price is likely buoyed by robust lithium prices, with its latest auction results reiterating the bullish narrative.
Last week, Pilbara Minerals announced the results of its second lithium spodumene digital auction. The highest bid came in at US$2,240/dry metric tonne (dmt) for 5.5% spodumene concentrate.
It was just two months ago that its inaugural auction received bids from US$700/dry metric tonne (dmt) to US$1,250/dmt.
S&P pointed out that tight supply conditions have led to higher prices, with some market participants buying “available September delivery cargoes to stockpile ahead of production”.
“Some suppliers were asking for Yuan 180,000/mt for October-delivery battery-grade lithium in their term negotiations, which — if accepted by buyers — will likely drive spot prices to Yuan 190,000/mt or above.”
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The Pilbara Minerals (ASX:PLS) share price is down 6% today. Is it a buy?
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.