Pilbara Minerals Ltd (ASX: PLS) CEO Dale Henderson says the lithium price may have reached a floor, given signs of falling supply in what has been an oversupplied market for some time.
Upon releasing the company's fourth quarter update, Henderson commented that crumbling lithium prices had prompted higher-cost suppliers to exit the lithium market. He added (courtesy Australian Financial Review):
It looks like high-cost supply is coming out of the market, so no surprise there.
And it looks like the bulk of the supply is reducing to those major producers with a low-cost profile, such as Pilbara.
Henderson added that it was "likely to be more difficult" for new lithium projects to find funding while commodity values remained as low as they are today.
This will help tighten supply and demand and benefit producers still operating today.
Pilbara Minerals reported a 4% increase in its average realised selling price for the fourth quarter to US$840 per dry metric tonne (dmt). Its average unit operating cost fell 7% to US$483 per dmt.
The full-year numbers aren't so pretty.
Spiralling lithium prices led to Pilbara's average full-year realised price crashing by 74% from US$4,447 per tonne in FY23 to $1,176 per tonne in FY24.
Image source: Getty Images
Are we there yet with lithium prices?
Unfortunately, top broker Goldman Sachs thinks there is further price pain to go with lithium values.
My colleague James reported Goldman's latest price predictions for 2024 through til 2027 as follows:
Spodumene 6% lithium price
- 2024: US$995 per tonne
- 2025: US$800 per tonne
- 2026: US$978 per tonne
- 2027: US$1,155 per tonne
Lithium carbonate price – China
- 2024: US$11,683 per tonne
- 2025: US$11,000 per tonne
- 2026: US$13,323 per tonne
- 2027: US$15,646 per tonne
Lithium hydroxide price – China
- 2024: US$11,463 per tonne
- 2025: US$12,500 per tonne
- 2026: US$14,323 per tonne
- 2027: US$16,146 per tonne
Pilbara Minerals share price snapshot
The Pilbara Minerals share price took a tumble in FY24 as lithium prices continued their decline.
Pilbara Minerals shares fell 37.22% over FY24 to finish the year at $3.07 per share on 28 June.
Today, the Pilbara Minerals share price is $2.86, down 1.21%.
Goldman Sachs has reiterated its sell rating on Pilbara Minerals shares. Following yesterday's quarterly report, the broker has also cut its 12-month price target from $2.60 to $2.40 per share.
Here's how other ASX lithium shares are tracking today:
- Core Lithium Ltd (ASX: CXO) shares are 9.2 cents, down 2.13%
- Mineral Resources Ltd (ASX: MIN) shares are $51.94, down 1.38%
- Liontown Resources Ltd (ASX: LTR) shares are 95 cents, down 2.07%
- Arcadium Lithium CDI Def (ASX: LTM) shares are $5.03, down 1.57%.
In a recent article, my colleague Bernd pondered: How risky is buying ASX lithium shares right now?
