Pilbara Minerals (ASX:PLS) share price on watch after record lithium auction results

Pilbara Minerals’ lithium auction prices have more than doubled since July.

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Lots of hands are in the air as the auction gets underway.

Image source: Getty Images

The Pilbara Minerals Ltd (ASX: PLS) share price could be a mover on Wednesday after the company released its third Battery Material Exchange (BMX) auction results.

Results of third BMX auction

Up for grabs was a cargo of 10,000 dry metric tonne (dmt) of spodumene concentrate at a target grade of 5.5% for a deferred delivery date of February 2022.

Pilbara Minerals received 25 bids online during the 45-minute auction window. They consider this very strong interest, despite the deferred delivery date.

The highest bid came in at US$2,350/dmt free on board (FOB), or US$2,629/dmt when costs, insurance and freight (CIF) are added.

The bidder is now required to enter into a sales contract. The contract will require them to pay a 10% deposit in the coming days, and be bound by an irrevocable letter of credit.

This could further drive the bullish performance of the Pilbara Minerals share price. On Tuesday the company announced an agreement with Korean giant POSCO to develop a lithium hydroxide monohydrate conversion facility. Following the announcement, Pilbara shares surged 8.1%.

It was 6 weeks ago that Pilbara Minerals released the results of its second spodumene concentrate BMX auction results.

The highest bidder came in at US$2,240/dmt FOB or US$2,500/dmt CIF. In comparison, the company’s inaugural BMX auction in July received bids ranging from US$700/dmt to US$1,250/dmt FOB.

Lithium prices balloon to record highs

The auction results might come as no surprise following the surge in domestic Chinese lithium carbonate and hydroxide prices.

According to S&P Global, battery-grade lithium carbonate prices rallied to 195,000 yuan (~US$3,050) per metric tonne last week. At the same time, battery-grade lithium hydroxide was trading at 190,000 yuan (~US$2,970).

“The [spodumene] auction next week is sending some nervous energy in the market,” a Chinese lithium dealer said. “People are desperate to secure materials in the market today before prices shoots [sic] up again.”

Pilbara Minerals share price

The Pilbara Minerals share price has been trading sideways since early August after surging more than 150% year to date.

It has stalled around the low $2 level, with a brief sell-off to a two-and-a-half-month low of $1.78 on 5 October.

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