The Pilbara Minerals Ltd (ASX: PLS) share price is rolling over right after its rally to all-time highs of $2.53 a month ago.
At market close, Pilbara Minerals is down 2.32% to $1.895. Earlier during trade, Pilbara was down 2.84% to a 2-month low of $1.885.
What's driving the Pilbara Minerals share price lower?
Lithium prices finish September near record highs
Lithium prices continued to accelerate in the first two weeks of September, underpinned by an uplift in demand and tight supply according to Benchmark Mineral Intelligence.
The pricing agency reported that technical and battery grade lithium carbonate prices in China have increased over 20% in the first half of September, and are up 188.9% and 215% respectively.
This is broadly in line with the Pilbara Minerals share price surging to an all-time high of $2.53 on 15 September.
More recently, Fastmarkets reported a slight pause in Chinese lithium prices in the week to Thursday 30 September, following the country's week long National Day public holiday.
Its report flagged "sentiment turning slightly more cautious owing to power restrictions being implemented in some battery materials production hubs."
Market sources said that certain production hubs of battery and cathode materials were hit with 30-70% production curbs.
Lithium and battery ETF retreats from highs
The Global X Lithium and Battery Tech Exchange Traded Fund (ETF) retreated on Friday night, down 0.77% to US$81.33. The Lithium ETF is down about 6.5% from September 15 highs of US$87.02.
The Lithium ETF invests in the full lithium cycle, from mining and refining the metal, to battery production and electric vehicles.
Its main holdings include heavyweight producers such as Albemarle Corp and Ganfeng Lithium, but it also has smaller allocations in ASX-listed companies such as Mineral Resources Limited (ASX: MIN), Orocobre Limited (ASX: ORE) and Pilbara Minerals.
The ETF's recent pullback might mean that the Pilbara Minerals share price isn't falling in isolation, but rather, that broader selling is taking place across the lithium supply chain.
Pilbara Minerals share price breaks below $2
The Pilbara Minerals share price previously bounced strongly off of $2 on multiple occasions.
It plunged 5.6% on 20 August, closing at session lows of $2.02. This was then followed by a sharp rally to highs of $2.35 in the next two days.
Pilbara Minerals hit $2 again on 27 August and 9 September but rallied strongly in the following sessions.
On this occasion, the Pilbara Minerals share price is breaking towards the downside amidst a weak S&P/ASX 200 Index (ASX: XJO).
