Why the Pilbara Minerals (ASX:PLS) share price surged 35% in a month

Lithium demand continues to grow.

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Key points

  • The Pilbara Minerals share price has soared 35% in a month
  • Demand for lithium has increased the price of the commodity
  • Brokers remain positive about the outlook for lithium

The Pilbara Minerals Ltd (ASX: PLS) share price is exploding this month.

The explorer's shares have increased 35% from $2.76 to the current share price of $3.73. However, today the company's share price is down 3.24% at the time of writing. For perspective, the S&P/ASX 200 Index (ASX: XJO) has gained about 1% in the last month.

Let's take a look at what may be driving investor confidence in the company.

What's happening at Pilbara Minerals?

The Pilbara Minerals share price has been on a steady curve upwards in the past month. Investors have been seeing consistent returns for a year, with the share price gaining 223% since this time a year ago.

Investors are reacting positively to rising lithium prices and global demand for the battery mineral used in electric vehicles.

Lithium carbonate prices in China have surged from 235,500 yuan per tonne to 327,500 yuan in the past month, a 39% boost.

Pilbara Minerals explores, develops, and operates its wholly-owned Pilgangoora Lithium Tantalum Project in the Pilbara region of Western Australia. It's regarded as one of the biggest hard-rock lithium-tantalum deposits in the world.

A positive note out of Citi stating the Pilbara Minerals share is "too early to sell" also weighed positively on the company's share price last week. The broker predicted demand for lithium will remain strong and supply will stay mild in the next six months.

Meanwhile, as my Foolish colleague Mitchell reported yesterday, the team at Credit Suisse is predicting ASX lithium shares will enjoy "unprecedented margins".

Macquarie retained its outperform rating on the share in late December and increased its price target by 32%.

The only price-sensitive news out of the lithium miner in the past month was released on 21 December. The miner downgraded its December quarter and FY 2022 annual concentrate production and shipping guidance. Pilbara Minerals also stated border closures had impacted its access to staff for construction, production, and maintenance roles in Western Australia.

Pilbara Minerals is due to release its quarterly results on Thursday 27 January.

What's going on with the Pilbara Minerals share price?

The Pilbara Minerals share price is up 6.7% in a week and 17.3% year to date.

In contrast, the benchmark ASX index is down about 1% since the start of the year.

The company has a market capitalisation of nearly 11.1 billion based on its current share price.

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 recommended Macquarie Group Limited. 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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