Why did the Pilbara Minerals share price have such a cracker day?

The Pilbara Minerals Ltd (ASX: PLS) share price was one of the strongest performers today, rising by 4.42%. Considering the S&P/ASX 200 Index (ASX: XJO) only went up by 0.36% during today’s trading, it was a good performance by the ASX lithium share.

It has been a very good year for the company. In the past six months, the share price has more than doubled.

Other ASX lithium shares also saw positive movements in their share prices today, including Core Lithium Ltd (ASX: CXO) and Mineral Resources Limited (ASX: MIN).

What caused the pleasing gain?

According to reporting by the Australian Financial Review, the broker Macquarie has increased its expectations for the lithium price again.

Even though there are near-term economic headwinds in China, including ongoing lockdowns, Macquarie decided to increase the Chinese and regional lithium price forecast, and the peak price for spodumene (lithium).

The reason for this increase was to include the latest changes in supply and demand fundamentals, as well as movements in spot prices.

Macquarie wrote:

We believe the theme of supply security could result in lithium trading and processing reshuffles, leading to an even tighter market.

Spot lithium prices have remained buoyant; we now expect spodumene prices to peak at US$6,500 per tonne.

Pilbara Minerals is already experiencing strong pricing

Investors have already been hearing throughout 2022 that the lithium price has been climbing.

Approximately a year ago, on 26 October 2021, the lithium miner announced that it had sold a cargo of 10,000 dry metric tonnes at a target grade of 5.5% lithia, via the Battery Material Exchange (BMX).

It said there was strong interest at that auction in both participation and bidding by a broad range of buyers. Pilbara Minerals sold to the highest bidder for a price of US$2,350 per dmt. This equated to a price of US$2,629 when accounting for the lithia content and including freight costs.

A few weeks ago, the ASX lithium share announced it had sold a cargo of 5,000 dmt for US$7,255 per dmt. This equated to an equivalent of approximately US$8,000 per dmt when adjusting for lithia content and including freight costs.

While Pilbara Minerals is only selling relatively small amounts of production at these high levels, we can see that it is achieving very strong prices.

Snapshot

Over the past month, the Pilbara Minerals share price has managed to climb another 4%, despite the volatility. It is up 54% this year to date.

The post Why did the Pilbara Minerals share price have such a cracker day? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today  
• Here are the 3 most traded ASX 200 shares on Tuesday
• Here are the 3 most heavily traded ASX 200 shares on Monday
• With a forward P/E ratio of 8, is the Pilbara Minerals share price actually cheap?
• Here are the 3 most traded ASX 200 shares on Friday

Motley Fool contributor Tristan Harrison 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 recommended Macquarie Group Limited. 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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