Lithium prices showing no signs of slowing down as Pilbara Minerals' auction hits US$6,350

Pilbara Minerals (ASX: PLS) has set another record for spodumene at its sixth digital Battery Material Exchange auction.

Pilbara Minerals said it received strong responses from participants and accepted a pre-auction offer of US$6,350/dmt.

“This is an exceptional outcome which provides further evidence of the unprecedented demand for battery raw materials being experienced across the global lithium-ion supply chain at this time,” said incoming Managing Director, Dale Henderson. 

“Contrary to recent suggestions that the market has peaked, the evidence we are seeing at the coal-face with our customers, including this pricing outcome, suggests that demand remains incredibly strong, with a continued healthy outlook for the foreseeable future.”

Battery Material Exchange auction history (US$, % vs. previous auction): 

• July, 2021: $1,250

• Sep 2021: $2,240 (+79%)

• Oct 2021: $2,350 (+5%)

• Apr 2022: $5,650 (+140%)

• May 2022: $,5,955 (+5.4%)

• Today: $6,350 (+6.6%)

Two sides to the story

Pilbara Minerals has lost almost 50% of its market cap since April, even as the company continues to churn out record setting spodumene auction results.

If the lithium sector is indeed as bullish as auction results suggest - then why is Pilbara Minerals trading at such a discount to previous highs?

A global economic slowdown, recession risks, aggressive interest rate hikes and sticky inflation has been a blanket issue that has massively downgraded the outlook for equity markets.

Even a bullish narrative like lithium, has been unable to escape the selling.

Valuation aside, Pilbara Minerals is selling lithium at its highest contractual levels on record.

The company was selling spodumene at around US$1,250 in the first-half of FY22, and said it expected prices to average around US$3,000 in the March quarter.

Recent auction results and pricing updates from Allkem (ASX: AKE) suggest further earnings momentum in the second-half of FY22. With August earnings season around the corner, we'll find out soon enough.

Pilbara Minerals price chart