Pilbara Minerals share price leaps 5% despite tumbling lithium prices

a man wearing a hard hat and a high visibility vest stands with his arms crossed in front of heavy equipment at a mine site.a man wearing a hard hat and a high visibility vest stands with his arms crossed in front of heavy equipment at a mine site.

Pilbara Minerals Ltd (ASX: PLS) shares are soaring today despite the company revealing tumbling lithium prices – and the downturn isn’t expected to ease for months.  

The S&P/ASX 200 Index (ASX: XJO) lithium giant updated the market on its quarterly performance yesterday evening, as The Motley Fool Australia reported earlier.

Shares in Pilbara Minerals are taking off right now, rising 4.67% to trade at $4.145.

Meanwhile, the ASX 200 is up 0.39%.

Let’s dive into the quarter just been, and what the company expects for the quarters to come.

Pilbara Minerals share price soars despite falling lithium prices

The Pilbara Minerals share price is in the green today. That’s despite the company’s realised spodumene concentrate sales price falling 15% quarter-on-quarter to around US$4,840 per dry metric tonne.

And that’s not expected to improve soon. The company believes pricing will continue to soften this quarter, before potentially strengthening in the second half of 2023.

Meanwhile, it lifted its full-year unit operating cost guidance to between $600 and $640 per dry metric tonne. That’s up from $580 to $610 a tonne.

However, looking longer-term, the company is still expecting big things from the battery-making material.

Speaking to shareholders and analysts this morning, Pilbara Minerals CEO and managing director Dale Henderson said the company remains “very positive on the structural deficit for lithium”.

There were two major trends bolstering its bullishness last quarter: Major investment in the space and electric vehicle uptake.

Pilbara Minerals ‘remains bullish’ on lithium long-term

Of course, ASX 200 lithium fans were likely overjoyed by a $2.50 per share takeover bid put to Liontown Resources Ltd (ASX: LTR) by giant Albemarle in March.

Other examples of cash being poured into lithium last quarter include General Motors’ US$650 million partnership with Lithium Americas and LG Energy Solution‘s multi-billion commitment to a battery manufacturing facility in North America.

Meanwhile, Henderson pointed to the long-term rise of EV sales in China and around the globe. He said it’s “the key consumption driver [of lithium] right now”.

However, a slump in adoption last quarter likely weighed on lithium prices. Chinese buyers seemingly turned away from EVs amid the end of government subsidies and heavy discounts on fossil fuel-powered vehicles ahead of the introduction of emission standards in the nation.

Still, the ASX 200 lithium producer is hopeful of long-term lithium pricing, with Henderson concluding:

Pilbara Minerals remains bullish on the at the long-term outlook for the market, and remains committed to our expansion and getting on with the job of developing this incredible tier 1 asset [the Pilgangoora Project] and enjoying, hopefully, strong margins from many quarters and many years to come.

How has the stock performed over the longer-term

Pilbara Minerals shares have outperformed the ASX 200 in recent months and years.

The stock has lifted 15% since the start of 2023. It’s also currently 55% higher than it was this time last year.

Meanwhile, the ASX 200 has gained 5% year to date and fallen 1% over the last 12 months.

The post Pilbara Minerals share price leaps 5% despite tumbling lithium prices appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended General Motors and has recommended the following options: long January 2025 $25 calls on General Motors. 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 Scott Phillips.

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