Pilbara Minerals (ASX:PLS) share price on watch as lithium prices boom

Lithium auction prices rise again amid tight supply and strong demand.

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The Pilbara Minerals Ltd (ASX: PLS) share price could be a mover on Wednesday. This is after the company announced the results of its second lithium spodumene concentrate digital auction.

Battery materials exchange price surge

Pilbara Minerals launched a new sales and trading platform for its Pilgangoora project in March. The company saying it provides "flexibility to transaction by auction, tender process or bilateral sale."

During the inaugural battery materials exchange (BMX) auction held on 29 July, Pilbara Minerals received 62 online bids. The bids ranged from US$700/dry metric tonne (dmt) to US$1,250/dmt free on board Port Hedland, for a 10,000 dmt cargo of spodumene concentrate.

On Thursday, Pilbara Minerals revealed the results of a second spodumene concentrate digital auction. The highest bid was almost double that of its July auction.

Pilbara Minerals said that it intends to accept the highest bid of US$2,240/dmt for the intended 8,000 dmt (spodumene concentrate 5.5%, free on board Port Hedland basis) cargo.

The company added:

…given the strong margins yielded through the BMX trading platform to date, Pilbara Minerals expects to channel more concentrate sales through the platform, including concentrate generated from the recommencement of the Ngungaju processing plant.

According to S&P Global, a China-based bidder said, "We started [bidding] at slightly over $1,100/dmt and we were expecting the price to hit a maximum of $2,000/mt. This [closing price] is a really crazy high one."

A Chinese refiner also commented that "if we buy at this price, there will be no profit margin left for us."

Pilbara Minerals share price takes a breather

The Pilbara Minerals share price has been consolidating around the ~$2.20 level since early August.

It has rallied 159% year to date and surged more than 600% in the last 12 months.

During this time, lithium prices have ballooned from multi-year lows to record highs.

In an update for the quarter ending in June last year, reporting agencies indicated spodumene prices in the range of US$410-423/dmt.

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.

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